Hi
can anybody explain that "how to calculate the weighted average cost of capital"
particularly how to calculate the weight part.
Thanks & Regards
Dilip 9881898023
Dilip Joshi (CSA) (38 Points)
25 September 2009Hi
can anybody explain that "how to calculate the weighted average cost of capital"
particularly how to calculate the weight part.
Thanks & Regards
Dilip 9881898023
Vinay Desai
(Treasury)
(32 Points)
Replied 25 September 2009
The WACC formula:
Cost of Debt * % of Debt + Cost of Equity * % of Equity
Now the weights in this case:
If my Debt is Rs. 300 and my Equity is Rs. 100, my total capital employed will be Rs. 400
Now weight of Debt - 300/400 = 75%
and Weight of Equity = 100/400 = 25%
Hope it answers your query !!
Ashish M
(Chartered Accountant)
(2731 Points)
Replied 25 September 2009
MULTIPLY THE COST OF A PARTICULAR COMPONENT OF CAPITAL STRUCTURE WITH ITS SHARE PROPORTION IN THE TOTAL VALUE OF THE CAPITAL STRUCTURE.................
FOR THE PURPOSES OF CALCULATING THE SHARE PROPORTION, MARKET VALUES CAN PROVIDE THE BETTER OPTION............
ARUNA G V A
(student)
(42 Points)
Replied 26 September 2009
wow thankq soo much .... Vinay and Ashish
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