Cost of funding of Campus Bite

The following values to calculate the cost of funding for Campus Bite;

1. Total Debt: 0

2. Average Interest Rate: 0%

3. Tax Rate: 25%

4. Risk-Free Rate (RF): 3%

5. Equity Risk Premium (ERP): 7%

6. Beta (β): 1.2

7. Proportion of Debt (D): 0%

8. Proportion of Equity : 100%

Based on of Values, the cost of funding (WACC) for Campus Bite

1. Cost of Debt:

Since the total debt is assumed to be zero and the average interest rate is also zero, the cost of debt
will be zero.

2. Cost of Equity:

Cost of Equity = Risk-Free Rate + Beta * Equity Risk Premium

= 3% + 1.2 * 7%

= 3% + 8.4%

= 11.4%

3. Weighted Average Cost of Capital (WACC):

WACC = (Proportion of Debt * Cost of Debt) + (Proportion of Equity * Cost of Equity)

= (0 * 0%) + (1 * 11.4%)

= 0 + 11.4%

= 11.4%

Therefore, based on these values, the estimated cost of funding (WACC) for Campus Bite is 11.4%.