Weighted average cost of capital is the rate at which a company is expected to pay in order to finance its assets.
Weighted average cost of capital or WACC is calculated using the following formula
Where:
Re = cost of equity
Rd = cost of debt
E = market value of the firm's equity
D = market value of the firm's debt
V = E + D
E/V = percentage of financing that is equity
D/V = percentage of financing that is debt
Tc = corporate tax rate
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A few sample topics that the tutor group can tutor you are given below
- Weighted average cost of capital
- Cost of capital
- Cost of debt
- Cost of Equity
- Discount rate
- Market value
Weighted average cost of capital is widely used in finance.
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