NPV & WACC calculation help

NPV calculation help Hi guys. I'm trying to calculate a NPV for a company (an imaginary company in an exercise, call it company XYZ).
The discount ratio used is the WACC. I want to calculate this quantity.
I have the following information: - D/E for XYZ is to be kept at 50% - corporation tax is at 35% - current corporate bond rate is 8% - a similar company (a competitor) has D/E of 33.33% and cost of equity of 17%
Now WACC is: WACC = E/(D+E) * Re + D/(D+E) * Rd * (1-Tc)
Where: Re = cost of equity = ? Rd = cost of debt = 8% E = market value of the firm's equity D = market value of the firm's debt V = E + D E/V = percentage of financing that is equity = 66.7% D/V = percentage of financing that is debt = 33.3% Tc = corporate tax rate = 35%
So I'm not sure what the value of E/V and D/V is. Do I use the book value of the company or the value of the competitor? Also I'm not sure whether I can just use Re% which is the value for the competitor or should I somehow calculate a value for company XYZ from the data for the competitor?
I'm a bit confused so I don't know whether you can calculate the WACC/ discount ratio at all from the above information. I have produced a cache flow report too from where I can directly derive the discount ratio. Reply With Quote Multi-Quote This Message Quick reply to this message Thanks
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