WACC = Kd*Wd + Ke*We Kd = Cost of debt Ke = Cost of equity Enter the Stroke in the Financial Calculator - FV = 1000 PV = -1011.29 N = 42 (21*2 = 42) PMT = 35 (1000*7% = 70 /2 = 35, semi annual coupon) CPT -I/Y = 3.448 Cost of debt before Tax = 6.89% Kd = 6.89 (1- 0.28) Kd = 4.966% Step 2/2 Ke = Rf + (Rm-Rf)*beta Ke = 1.2 + (9 - 1.2)*1.4 Ke = 12.12 Market value of debt = 22000000 * 1011.29 / 1000 = 22248380 Price of Equity = D1 / (Re -g) Price = 2.5 (1+g) / (0.1212 - .004) Price = 32.019 Market value of equity = 32.019 * 1250000 = 40024630 Weight of debt = 22248280 / 62273010.54 ( debt + equity) Wd = 0.357 We = 40024630 / 62273010 We = 0.643 How is the price calculated out to 32.019?