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How can we calculate the weighted average cost of capital ?

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Question ajoutée par Utilisateur supprimé
Date de publication: 2014/05/20
Utilisateur supprimé
par Utilisateur supprimé

Weighted Average Cost of Capital is calculated by weighing the Cost of Capital and Cost of equity in a Capital Structure of a Company

Mohammad Ibrahim, CMA, CertIFR
par Mohammad Ibrahim, CMA, CertIFR , Accounting Operation Team Leader , KFH ( Kuwait Finance House )

W.A.C.C : is a firm's cost of :

1- cost of debt Financing .( Cheapest Because Of Tax Deductability ). 

2- Cost of Preferred Stocks .

3- Cost Of Equity ( Common Stocks & Retained Earnings ) .

averaging them according to the market value of each sources.

Joseph Kouly
par Joseph Kouly , Finance and Admin Officer , Info Ride Media

Your cost of capital is your cost of equity plus cost of debt. The weight is based on how much of each is you capital made of.60% debt Vs40% equity.

 

Joe

Nouman Mustafa
par Nouman Mustafa , Finance Manager (Financial Planning & Reporting) , Saudi Arabian Airlines

Wacc = 《(market value of equity X cost of equity in % + market value of debt) X (after tax cost of debt financing in %)》 /  market value of equity + market value of debt.

 

 

Dont have to explaim this as very good explanation is given by the guys above

Muhammad Afaq
par Muhammad Afaq , SENIOR FINANCIAL ACCOUNTANT , United Eddy Company (United Yousef M. Naghi Group)

The weighted average cost of capital (WACC) is being calculated by weighing each category of capital on the basis of their proportion available in the capital structure.

The debts, common stock, preferred stock, and bonds are the different categories of capital structure.

 

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