please help me

wacc=16% kd is 40%,ke is 60% ,t is 30%

required keu?

formula wacc=keu(keu-kd)(1-t)kd/ke.

answer is 14.1% but i dunt know how to calculate it...

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- May 22nd 2008, 07:25 AMboziequation rearrange
please help me

wacc=16% kd is 40%,ke is 60% ,t is 30%

required keu?

formula wacc=keu(keu-kd)(1-t)kd/ke.

answer is 14.1% but i dunt know how to calculate it... - May 22nd 2008, 08:17 AMcolby2152
I assume $\displaystyle keu$ is one variable and it is not equal to $\displaystyle ke*u$?

$\displaystyle wacc = keu*\frac{(keu-kd)(1-t)(kd)}{ke}$

Fill in what you know...

$\displaystyle 0.16 = keu*\frac{(keu-0.4)(1-0.3)(0.4)}{0.6}$

$\displaystyle 0.16 = keu*\frac{(keu-0.4)(0.28)}{0.6}$

$\displaystyle \frac{0.16*0.6}{0.28} = keu*(keu-0.4)$

$\displaystyle \frac{0.16*0.6}{0.28} = keu*(keu-0.4)$

$\displaystyle 0.3429 = keu^2 - 0.4keu$

Let $\displaystyle x = keu$

$\displaystyle 0.3429 = x^2 - 0.4x$

$\displaystyle x^2 - 0.4x - 0.3429 = 0$

Can you solve this quadratic for x? - May 22nd 2008, 08:23 AMsean.1986
- May 22nd 2008, 08:28 AMcolby2152
- May 22nd 2008, 10:35 AMbozi
thank you so much, i don't know maybe i dunt knw it's correct answer.

- May 22nd 2008, 10:38 AMsean.1986
You should post more information about the question. Perhaps post it in full?

- May 23rd 2008, 02:51 AMbozi
it's an accounting question, which ask for cost of equity of ungeared company so it stand as keu.

i asked many accounting quetion but nobody replies to them (Worried)