As we have assumed that Profits After Tax will be distributed as Dividend, hence

Re = Ra = Dividend is as follows:

COMPANY NAME		U (US$)	G1 (US$)	G2 (US$)	G3 (US$)	G4 (US$)
Share Capital	E	50,000	40,000	35,000	30,000	25,000
Profit after Tax	Div	7,500	6,900	6,600	6,300	6,000
Actual Rate of Return on Equity	Ra, Re (Div/E)	0.150	0.173	0.189	0.210	0.240
WACOC = Ro	Ro (D/C*(1-Rt)*Rd) + (E/C*Re)	0.15	0.15	0.15	0.15	0.15

• Re is increasing with increase in risk.
• Ro is fixed even after taking the fact of interest as (1-Rt).

Valuation of Business for Equity Holders - Detailed working

Valuation of Business for Equity Holders		U (US$)	G1 (US$)	G2 (US$)	G3 (US$)	G4 (US$)
Operating Value of Business for Equity Holders	Vo (EBIT/Re)	83,333.33	72,463.77	66,287.88	59,523.81	52,083.33
Less: Loans	D D	-	(10,000.00)	(15,000.00)	(20,000.00)	(25,000.00)
Value of Business for Equity Holder before Interest & Tax Obligations (Gross Value of Equity)	VBIT (Vo-D)	83,333.33	62,463.77	51,287.88	39,523.81	27,083.33
Value of Interest for Equity Holders	Ic (I/Re)	-	(5,797.10)	(7,954.55)	(9,523.81)	(10,416.67)
Value of Business for Equity Holders before Tax		83,333.33	56,666.67	43,333.33	30,000.00	16,666.67
Value of Tax for Equity Holders	Tc (T/Re)	(33,333.33)	(26,666.67)	(23,333.33)	(20,000.00)	(16,666.67)
Net Value of Business for Equity Holders (Value of Equity)	Ve	50,000.00	30,000.00	20,000.00	10,000.00	-