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When I calculate WACC’s debt and equity proportions, should I use D/E+D or D(1-T)/E+D(1-T) ?
I surely know that asset beta
should be equal to
equity beta x E/E+D(1-T).The two things are separate issues.
When calculating the WACC we always use the actual proportions (based on MV’s) i.e. E/(E+D) and D/(E+D).
Do watch my free lectures on this because it is all explained in the lectures.
Dear Mr. Moffat,
Thank you so much for your clarification. I do watch your free lectures for exam preparation. You’re really a brilliant teacher in the field of ACCA professional exam.
Kindest Regards,
Felix
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