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What should be the wacc for the palantir saas division

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Reference no: EM132696384

OcuPal is a firm that has two divisions: One division (Palantir) sells SaaS (software as a service) products and the other division (Anduril) sells hardware to government clients. You have decided that Raytheon is a firm that is very similar to OcuPal's hardware division in terms of both risk exposure and capital structure.

You have found the following information about Raytheon online:

  • Raytheon's beta is 0.80, the risk-free rate is 5.00%, its market value of equity is $28.5 billion, and it has $916.8 million worth of debt that currently trades with a YTM of 5.70%. The corporate tax rate is 30.0% and the market risk premium is 9.40%.

Problem A) Given the above information, what is the WACC of OcuPal's hardware division (Anduril)?

Problem B) If OcuPal's overall company WACC is 15.50% and the Anduril division represents 64.00% of the firm's total value, then what should be the WACC for the Palantir SaaS division?

Reference no: EM132696384

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