Originally Posted by
Snoopy
Winner:
1/ If the WACC is 7.6%, and
2/ RBD is able to renegotiate its banking facilities so that they pay no more than 7.6% interest. and
3/ if the dividend yield is greater than 7.6% (which I think it will be), then
If you do a present value calculation on the future value of RBD dividends, you will get positive returns as far out into the future as you can see. That implies there is no price you can pay for RBD shares that is too high. I would submit that the PWC WACC of 7.6% cannot be right.
SNOOPY