All about WACC
Learn from colleagues and experts
Join now. Completely free.
Log in
In the best practices section you will find the best forum discussions within this knowledge area.
|
Calculating WACC | WACC Calculation
Krisztina
I have been asked to calculate the WACC using the following info: Capital structure: Ordinary shares (fully paid) :1000000, preference shares: (11%) 400000, debentures: (10%) 600000. The ordinary share holders expect a divident of 14% per year. Corporate tax is estimated at 30%.
---
I did a bit of work on the above challenge, but I'm not sure if I'm on the right track... could someone point out if there are any mistakes? (600,000/2.000,000 * 10% * (1-30%)) + (400,000/2.000,000 * 11%) + (1.000,000/2.000,000 * 14%) = 19.2% Thank you for any help provided.
|
|
| |
|
Calculation of WACC
Mudedla Srinivas Kumar Though your calculation seems O.K. factoring for Cost of Equity would have made your calculation more refined. which is as follows: Cost of Equity sho... 
|
|
| |
|
WACC
Antonio Villa Mardon, Economist, Peru, Member You need to modify the cost of equity as follows:
CE = RfR + B ((Rm-RfR), being RfR the risk free rate B, the beta Rm Expected market return. ...
|
|
| |
|
Response to Calculation of WACC
bhavik, Student (MBA), India, Member Though the calculation is correct, you could have calculated KE using the formula given below i.e. KE = D/PE+G
Where, D = Dividend = the amount ...
|
|
| |
|
WACC Calculation
Muhammad Wasim, Student (MBA), Pakistan, Member As regards to this calculation, I got a result of 11.3% instead of 19.2%, without taking into account the beta and risk free return. Can you please co...
|
|
| |
|
WACC Calculation
Rishi R Koirala, Teacher, Nepal, Member If you calculate the WACC the following way:
600,000 / 2,000,000 * 10% * (1 - 0.3) + 400,000 / 2,000,000 * 11% + 1,000,000 / 2,000,000 * 14% = 11...
|
|
| |
|
Calculation of WACC
Blessing Katuka Normally the following steps must be done to calculate WACC:
- Determine different sources of finance.
- Calculate marginal component costs ...
|
|
| |
|
Calculation of WACC
Ahid Moghal, Teacher, United Kingdom, Member I calculate using a tableau with 5 columns. That makes life much easier, and you can see the whole calculation in one go:
The 5 columns are:
...
|
|
|
