Calculating WACC  WACC Calculation Example
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% * (130%)) + (400,000/2.000,000 * 11%) + (1.000,000/2.000,000 * 14%) = 19.2% Thank you for any help provided.
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0 

Mudedla Srinivas Kumar, India


Calculation of WACC
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 should be : Risk Free return + Beta*Market price.




0 

bhavik, India


Response to Calculation of WACC
Though the calculation is correct, you could have calculated KE using the formula given below i.e. K... Sign up




0 

Blessing Katuka, Zimbabwe


Calculation of WACC
Normally the following steps must be done to calculate WACC:
 Determine different sources of finan... Sign up




