4b

a4 b    The main assumption being made in the estimation of the WACC figure is that past experience is a good guide to the future. More specifically:

                      i.        that the risk of the proposed investment is similar to the average risk of the business’s recent past activities;

                     ii.        that past dividend growth is similar to future prospects. This seems a dubious assumption in this particular case since the dividend growth rate has been very erratic from one year to the next;

                    iii.        that future interest and tax rates are likely to be similar to current ones.