COST OF CAPITAL CALCULATION

Parameters Source

Debt (D)

Equity (E)

Government Guarantee Fee

Debt Equity (D/E)

Capital (V)

Debt Gearing (D/V)

Risk Free Rate (Rf)

Market Risk Premium (Rmp)

Tax Rate (t)

Debt Margin

Gamma (y)

Asset Beta (Ba)

Equity Beta (Be) Ba * (1 + (1 - t+ yt)D/E)

Inflation Rate (i)

Cost of Debt (Rd) Rf + Debt Margin

Cost of Equity (Re) Rf + (Be * Rmp)

'Vanilla' WACC (nominal post tax) Re*E / V + Rd*D / V

'Classical' WACC (nominal post tax) Re*E / V*(1-t)/(1-t(1-y)) + Rd*(1-t)*D / V

'Classical' WACC (nominal pre tax) Rd*(D/V) + Re/(1-T(1-y)) * E / V

WACC (real pre tax) (((1+WACCnom,post-tax)/(1+i))-1)/(1-t))

Information Input

Assumption: Information remain same

through out the year