1. ## equation rearrange

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...

2. Originally Posted by bozi

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...
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?

3. Originally Posted by bozi

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...
Originally Posted by bozi

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...
0.16 = (keu(keu-0.4)(1-0.3)(0.4))/0.6

0.096 = keu(keu-0.4)(0.28)

12/35 = keu^2 - 0.4keu

35keu^2 - 14keu - 12 = 0

But I don't get 0.14 as one of the answers...

4. Originally Posted by sean.1986
0.16 = (keu(keu-0.4)(1-0.3)(0.4))/0.6

0.096 = keu(keu-0.4)(0.28)

12/35 = keu^2 - 0.4keu

35keu^2 - 14keu - 12 = 0

But I don't get 0.14 as one of the answers...
Both of our equations end up being the same. Yours is simply 35 times mine. I, also, do not receive an answer of 0.141

5. thank you so much, i don't know maybe i dunt knw it's correct answer.

7. 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