{"id":497,"date":"2014-06-21T16:12:13","date_gmt":"2014-06-21T16:12:13","guid":{"rendered":"http:\/\/zh.aceessays.com\/tc\/?p=497"},"modified":"2015-01-18T20:41:04","modified_gmt":"2015-01-18T20:41:04","slug":"calculating-the-wacc","status":"publish","type":"post","link":"https:\/\/www.aceessays.com\/tc\/calculating-the-wacc\/","title":{"rendered":"Calculating the WACC"},"content":{"rendered":"<h3>Calculating the WACC<\/h3>\n<ul>\n<li>Market values or book values?<\/li>\n<li>Book values are historical<\/li>\n<li>Market values reflect current requirements<\/li>\n<\/ul>\n<p>Note that retained earnings are ignored in WACC<\/p>\n<ul>\n<li>Before or after tax?<\/li>\n<li>Before-tax WACC for before-tax cash flows<\/li>\n<li>After-tax WACC for after-tax cash flows<\/li>\n<li>Which tax rate to use?<\/li>\n<\/ul>\n<h3>Calculating the WACC<\/h3>\n<ul>\n<li>To find the average cost of capital, we weight individual costs of capital by their proportions in the firm\u2019s capital structure<\/li>\n<\/ul>\n<p>E = value of equity D = value of debt<br \/>\nE\/(E+D) is the proportion of equity<br \/>\nD\/(E+D) is the proportion of debt<\/p>\n<h3>Calculating the WACC<\/h3>\n<ul>\n<li>Cost of equity: Ke = 16.9%<\/li>\n<li>Cost of preference shares: Kp = 13.4%<\/li>\n<li>Cost of irredeemable debt: Kid = 9.7%<\/li>\n<li>Cost of redeemable debt: Krd = 8.7%<\/li>\n<li>Cost of bank loans: Kbl = 8.8%<\/li>\n<\/ul>\n<p>Note that the relative costs of the different sources reflect their relative risks, i.e. reflect the risk-return hierarchy of financial securities.<\/p>\n<h3>Calculating the WACC<\/h3>\n<p>Weighting by market values (see textbook)<\/p>\n<ul>\n<li>Equity: 16.9% x 633.6\/871.5<\/li>\n<li>Preference shares: + 13.4% x 33.5\/871.5<\/li>\n<li>Irredeemable debt: + 9.7% x 68.4\/871.5<\/li>\n<li>Redeemable debt: + 8.7% x 76.0\/871.5<\/li>\n<li>Bank debt: + 8.8% x 60.0\/871.5<\/li>\n<\/ul>\n<p>= 14.9% = WACC<\/p>\n<p>What is a good essay writing: <a href=\"http:\/\/www.aceessays.com\/tc\/\">\u8ad6\u6587\u4ee3\u5beb<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Calculating the WACC Market values or book values? Book values are historical Market values reflect current requirements Note that retained earnings are ignored in WACC Before or after tax? Before-tax WACC for before-tax cash flows After-tax WACC for after-tax cash flows Which tax rate to use? Calculating the WACC To find the average cost of capital, we weight individual costs of capital by their proportions in the firm\u2019s capital structure E = value of equity D = value of debt E\/(E+D) is the proportion of equity D\/(E+D) is the proportion of debt Calculating the WACC Cost of equity: Ke = 16.9% Cost of preference shares: Kp = 13.4% Cost of irredeemable debt: Kid = 9.7% Cost of redeemable debt: Krd = 8.7% Cost of bank loans: Kbl = 8.8% Note that the relative costs of the different sources reflect their relative risks, i.e. reflect the risk-return hierarchy of financial securities.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"class_list":["post-497","post","type-post","status-publish","format-standard","hentry","category-notes"],"_links":{"self":[{"href":"https:\/\/www.aceessays.com\/tc\/wp-json\/wp\/v2\/posts\/497","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.aceessays.com\/tc\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.aceessays.com\/tc\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.aceessays.com\/tc\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.aceessays.com\/tc\/wp-json\/wp\/v2\/comments?post=497"}],"version-history":[{"count":1,"href":"https:\/\/www.aceessays.com\/tc\/wp-json\/wp\/v2\/posts\/497\/revisions"}],"predecessor-version":[{"id":1525,"href":"https:\/\/www.aceessays.com\/tc\/wp-json\/wp\/v2\/posts\/497\/revisions\/1525"}],"wp:attachment":[{"href":"https:\/\/www.aceessays.com\/tc\/wp-json\/wp\/v2\/media?parent=497"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.aceessays.com\/tc\/wp-json\/wp\/v2\/categories?post=497"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.aceessays.com\/tc\/wp-json\/wp\/v2\/tags?post=497"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}