In calculating wacc for the cost of debt use the current

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In calculating WACC, for the cost of debt, use the current cost of debt, with the assumption that there is no need to raise additional debt. To find the cost of equity here, use the dividend discount model, however, you need to compare the earnings from 1983 to 1993 to get the historical growth rate, and then half of the historical growth rate will be used as "g" in the dividend discount model to get the cost of common equity.

Reference no: EM13394829

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