John is a Minnesotan arable farmer with 60 hectares of land. His main crop is consumption potatoes. His total assets are worth $3,600.000, and he has a loan outstanding of $750,000 over which he pays 6% interest. Their return on assets for this year was $150,000 and he had to pay $21,000 in taxes. Their family consumption rate is 30%. Consumption rate =30% 2. Determine their weighted average cost of capital according to the Equilibrium Theory. Tip 1: calculate first the ROE out of the (unweighted) ROA; then use this to calculate the WACC or Ia.WACC=Ia=Id(1t)AD+IeAE Tip 2: WACC or Ia has to be calculated, all items known except Ie. Calculation of ROE(Ie) can be derived from: ROA=IdAD+IeAE John is a Minnesotan arable farmer with 60 hectares of land. His main crop is consumption potatoes. His total assets are worth $3,600.000, and he has a loan outstanding of $750,000 over which he pays 6% interest. Their return on assets for this year was $150,000 and he had to pay $21,000 in taxes. Their family consumption rate is 30%. Consumption rate =30% 2. Determine their weighted average cost of capital according to the Equilibrium Theory. Tip 1: calculate first the ROE out of the (unweighted) ROA; then use this to calculate the WACC or Ia.WACC=Ia=Id(1t)AD+IeAE Tip 2: WACC or Ia has to be calculated, all items known except Ie. Calculation of ROE(Ie) can be derived from: ROA=IdAD+IeAE