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You do a bit of research and decide to model new costs of capital based upon a new entrant to the shoe industry versus the
You do a bit of research and decide to model new costs of capital based upon a new entrant to the shoe industry versus the mature company. You decide that the cost of debt at 8.25% is probably pretty accurate, but you want to model a .35% standard deviation around this rate. You also assume that the rate on equity at 15% is low and should be a bit higher to capture that premium for risk (you are deleting this premium as you are now doing the calculation for simulated rates). You decide to model a base rate of 18% with a standard deviation of 1.5%. You build a simulation to run 100 scenarios for these rates using a normal distribution. Use these to calculate possible WACC's for the company. Use "offset" and a 1-variable data table to find WACC for each combination of numbers
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