Register now or log in to join your professional community.
Bank loans do not have market values in the same way as debenture. All we can do in this case is to take the book value of the as an approximation of market value.
WACC is computed to measure the cost of capital i.e. cost of money should be used to fund some project(s)
Bank Loan is one of the capital resources that we should measure before using it in the funding the project.
The cost of Loan = its weight related to total Equity multiply by the interest rate to get the WACC
Thank You
