[wDRD(1 tax rate )]+[wPRP]+[wERE]=

Company Total assets Interest-bearing debt Average pre-tax borrowing cost Common equity: Book value Market value Income tax rate Market equity beta Risk free rate Market risk premium 14000 2500 6.00% 3000 2500 35.00% 2.25 2.50% 4.50% 110000 33000 4.00% 13000 110000 35.00% 0.75 2.50% 4.50% 44000 18000 5.00% 14000 22000 35.00% 1.2 2.50% 4.50% x RD x (1 - tax rate)l + x RPI + [WE x REI = 1 Compute the weighted average cost of capital (WACC) for Company A assuming a cost of equity capital of 12.63%. COST OF EQUITY 12.625 2 Compute the weighted average cost of capital (WACC) for Company B assuming a cost of equity capital of 5.88%. COST OF EQUITY 5.875 3 Compute the weighted average cost of capital (WACC) for Company C assuming a cost of equity capital of 7.90%. COST OF EQUITY 7.9