[mmcarey]

The WACC calculation is stated as a common pitfall on ACCA website, link below. See point 2. WACC below:

Debt/Equity = 30% so $30m for debt and $100m for equity. Total capital is therefore $130m

WACC uses the post-tax cost of debt, but the data provided is for the pre-tax cost of debt.

WACC = ((15.7 x (100/130)) +(( 6.5 x (1 – 0.25) x (30/130)) = 13.2%

https://www.accaglobal.com/us/en/student/exam-support-resources/professional-exams-study-resources/p5/technical-articles/pitfalls/solutions.html

So for APM exam, 35/135 and 100/135 is correct.

[Author]

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