WACC Calculation

Capital Structure
Debt to Total Capitalization
Equity to Total Capitalization
D/E RATIO
Tax rate in Italy
80.00% **Both of these are assumed based on:
20.00% 80% ownership of Ferrari being still under Fiat Chrysler
400.00% 10% of Equity with the Ferrari Family
Remaining 10% of equity on float
38.00%

Cost of Equity
Risk-free rate 1.70% IS ***assumed to be equal to 10 year govt. bond yield in Italy
Equity Risk Premium 5.56% IS **** average of equity risk premium in Italy from 2011 to 2015
Levered Beta- 80/20 2.02 Year Premium
Cost of Equity 80/20 12.94% 2011 5.50%
Levered Beta, mkt D/E 1.14 2012 5.60%
Cost of Equity w mkt 8% 2013 5.70%
2014 5.60%
2015 5.40%
Average 5.56%

Cost of Debt 2.30% *****assumed to be similar to interest rate on bond rating of s

Tax Rate 38.00%
After Tax Cost of Debt 1.43%

WACC, considering 80/20 caps 3.73%

WACC, considering market
D/(D+E) 0.56
E/(D+E) 0.44
WACC mkt 4.32%
 Unlevered Be
Company
Volkswagen
still under Fiat Chrysler BMW
Daimler
Ford Motors
Toyota Motors
Average
Sum
*Levered beta is assumed on 2 Years data

year govt. bond yield in Italy Now, re-levering the unlevered beta in respect to Ferrari:
mium in Italy from 2011 to 2015 Levered Beta, considering 80/20 ratio
Levered Beta, considering Ferrari follows the market D/E average

interest rate on bond rating of similar firms such as VW and Daimler, rated A2 corresponding A of case, for 2.30%
 Unlevered Beta of Comparable Companies-2015
Levered Beta* Debt-euro Debt in dollars Equity-euro Equity in dollars D/E euro D/E-dollars
1.25 139021 158483.94 52916 60324.24 262.72% 262.72%
1.1 77506 88356.84 56562 64480.68 137.03% 137.03%
1.53 86689 98825.46 77906 88812.84 111.27% 111.27%
1.23 98484 112271.76 52925 60334.5 186.08% 186.08%
0.75 147344 167972.16 186069 212118.66 79.19% 79.19%
1.17 155.26%
549044 426378

2.0213440493
1.1399698505

e, for 2.30%
Tax Unlevered Beta
29.80% 0.44
30.70% 0.56
29.83% 0.86
35.00% 0.56
30.89% 0.48
0.58