Cost of equity :
  
Formula :   
 ke = krf +  βj(km −krf)
 
 ke = expected (required) 
 rate of return on equity
 
 krf = rate of interest 
 on risk-free bonds 
 
 km = expected (required) 
 rate of return on the market 
 portfolio of stock.
 
 βj = coefficient of 
 systematic risk for the 
 firm (beta)
 
Cost of debt and kwacc formula :

kd = (before tax cost of debt)

wacc = kd(1-d)

kWACC=weighted average 
cost of capital

kWACC = ke*(E/V)+kd(1-t)*
D/V

t = tax rate
E = Equity 
D = Debt
V =(D+E)


To determine kd(USD)
Borrowing of CHF 1.5 m
interest rate year 1 = 5%
USD/CHF 1.5 then 1.44

D0(CHF) = 1.5 m = borrowing

D0(USD) =  D0(CHF) / S0(X/Y)

At the end of year :
D1(CHF) = 1.5m * 5%
D1(USD) = D1(CHF)/
S1(USD/CHF)

kd(USD) = (D1(USD)/D0(USD)*
(1-t)

WACC = moyenne des wacc
pour comparer
plusieurs projets

Exercice 4:
kd(cost of debt) of USD
for appreciation/depreciation

7.5% i, GBP 5 million borrow
GBP/USD 2 to GBP/USD 1.95 at
the end of the year

beginning of the year :
5 000 000 * 2 = 10 million

inrest rate at end of year :
5 000 000 * 7.5% = 375 000

end of the year (borrowing):
5 375 000*1.95 = 10 481 250

kd(usd) = (10 481 250/
10 000 000)-1

Kd(cost of debt) if we see
"appreciates/depreciates" =
muliply spot exchange rate
if it didn't mention that =
divide the spot exchange rate


PV table :
  
Sales price
sales volume
new exchange rate
sales revenues
direct costs
margin
Pv factor (1/1+wacc)**n
with n = year
PV = margin * pv factor
PV of margins = NPV
(all PVs added)