Question:

I simply need help getting the appropriate WACC for use with the paramaters below. Need some guidance on how to set this all up to get to an answer (don't need a solution). Need to know how to do it...

Exhibit 1 -Market Value Target Leverage Ratios

Debt as a percentage of Value Average Cost of Debt

United Health Products 30% 7%

New You, Inc 30% 10%

Innovative Health 40% 12%

Better Living, Inc. 25% 8%

Exhibit 2 - Company Data

Average Return Beta Current Market Leverage Ratio Revenues (in $Billions) Effective tax rate

United Health Products 15% 0.88 50% 12 .36

New You, Inc 13% 1.2 20% 1.5 .30

Innovative Health 17% 1.07 60% 1.4 .30

Better Living, Inc. 14% 1.5 15% 0.5 .30

Exhibit 3 - Government Bond Rates & Market Spread Data

US Government Bond Rates

1-year 7.00%

10-year 8.05%

30-year 8.95

Spread Between S&P 500 Composite Returns & Government Bond Returns

Short Term (3-year average) 16%

Long Term (12-yearaverage) 12.50%