is Australia Post’s benchmark gearing ratio D (a) V is Australia Post’s benchmark equity ratio E (b) V (c) is the imputation factor γ (d) is the effective tax rate Te (e) is the rate of return on equity re (f) is the rate of return on debt rd (4) In preparing the Statement of WACC: (a) the rate of return on equity ( ) is determined according to the following re formula: (r ) + = rf re rf βe − where: i) is the risk-free rate-of-return, is the rate on government bonds rf ii) is the equity beta, is the degree of correlation between a βe particular asset's earnings and those of the market in general and is determined using the following formula: = + (β β β β − − )T rd D − γ 1 + r d e a a E e d where: is the equity beta βe is the asset beta βa is the debt beta βd is the imputation factor γ is the effective tax rate Te is the return on debt; and rd is the debt to equity ratio. D E
(a) (b) D is Australia Post’s benchmark gearing ratio V E is Australia Post’s benchmark equity ratio V (c) γ is the imputation factor (d) Te is the effective tax rate (e) re is the rate of return on equity (f) rd is the rate of return on debt (4) In preparing the Statement of WACC: (a) the rate of return on equity ( re ) is determined according to the following formula: re = rf + βe (r − rf ) where: i) rf is the risk-free rate-of-return, is the rate on government bonds ii) βe is the equity beta, is the degree of correlation between a particular asset's earnings and those of the market in general and is determined using the following formula: β = β + (β − β − rd − γ )T D e a a d 1 + r e E d where: βe is the equity beta βa is the asset beta βd is the debt beta γ is the imputation factor Te is the effective tax rate rd is the return on debt; and D is the debt to equity ratio. E
Revised%20Australia%20Post%20regulatory%20accounting%20framework%20record%20keeping%20rules%20-%201%20July%202016%20%28FINAL%29.doc.DOCX