a. What is GDZ’s weighted average cost of capital under scenario #1 and scenario #2?
WACC is given by % debt age*after tax debt + % equity age*cost of equity
b. Suppose that GDZ is expected to generate before-tax operating cash flow of 250 million Norwegian krone (NOK) at the end the next year. This cash flow is expected to grow at 5% perpetually. What is the value of GDZ under scenario #1 and scenario #2?
Company value = after tax cash flow/wacc-growth trend