ACCA AFM Syllabus B3cd. The Cost of Capital - WACC - Putting it all Together - Notes 4 / 4
WACC - Putting it all Together
So, you have studied all the bits in isolation, here’s where we get sexy and bring it all together..
So, this is kind of the proforma you need to set up, when you get a “Calculate the WACC..” question
DEBT/EQUITY | COST | Market Value | “Interest” |
Equity | 10% | 1,000 | 100 |
Loan | 6% | 800 | 48 |
Total | 1,800 | 148 |
So we have paid “interest’ of 148 on capital of 1,800…
So the WACC is 148/1,800 = 8.2%
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Advanced cost of capital