what gets me about the wacc is the fact that the higher it goes...

what gets me about the wacc is the fact that the higher it goes the cheaper the stock
eg

eps = $1
wacc1= 10%
wacc = 20%

intrinsic value1 = $1/.10 =$10
intrinsic value = $1/.20 = $5

its all to do with the risk premium

risk free rate = 3.75%

equity premium = 7%

wacc = 3.75+7= 10.75%

what sort of premium would you expect from investing stocks

I would have to say at least 7%
some people use beta x risk free rate but I reckon that is rubbish

no wonder fund managers are no better at stock picking than dart throwing chimp