Reference no: EM132590126

Your task is to determine the WACC for Henrico Doctors' Hospital (HDH)-Forest Campus. Your deliverable is a brief report in which you state your determination of WACC, describe and justify how you determined the number, and provide a relevant discussion of your findings. Refer to the WACC formula : WACC = Kd(1-t)(D / V) + Ke(E/V)

Company

Henrico Doctors' Hospital (HDH)-Forest Campus

Assumptions: 

HDH has a cost of debt of 6%, a corporate tax rate of 40%, and a debt weight of 60%.

HDH has a cost of equity of 11.4% and an equity weight of 40%.

Submit the following:

• Your calculated WACC. Describe how you used the assumptions to calculate the WACC. 
• What does HDH's WACC indicate? How could decision makers use this information?
• How would an increase in equity or debt impact the WACC?    
• U.S. corporate tax rates were reduced to 21% starting in 2018. Recalculate your WACC based on the new tax rates. Describe the impact of changes in corporate tax rates on HDH's WACC.  
• Is a higher WACC good or bad? Support your answer.   

Include the math used for your calculations.