Notional Cost of capital

Home Forums Ask ACCA Tutor Forums Ask the Tutor ACCA P5 Exams Notional Cost of capital

This topic contains 1 reply, has 2 voices, and was last updated by Profile photo of gromit gromit 2 years, 9 months ago.

Viewing 2 posts - 1 through 2 (of 2 total)
  • Author

  • avatar

    How is it computed and what is the concept behind it? Do we take tax effect or not?

    Profile photo of gromit

    I assume you are talking about EVA. The notional charge for the use of capital is based on the WACC of the company applied to the capital employed.

    The concept is that if the company were on its own and not part of a group it would have to raise its own capital and pay for it.

Viewing 2 posts - 1 through 2 (of 2 total)

You must be logged in to reply to this topic.