The providers of debt capital require a return of 6% (rD 6%), and the corporate tax rate is 25%. Using these assumptions,Exhibit 9 shows that Superstore's WACC is 0.0925.
The explicit period of this enterprise is from 2009 until 2012. From 2013 on, it is assumed all the ratios between the different items in the balance sheet and income statement will remain the same. Further assume that from 2013 onward, the expected annual growth rate is 2% until infinity. Exhibit 10 provides the ratios used for Superstore's income statements, balance sheets, and cash flow statements.