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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Bank overdraft – wacc
why do we exclude overdraft in calculation of WACC?
We do not always exclude it.
It depends whether it is intended to be long-term or short-term. For the WACC we are looking at the average cost of long-term capital.
(Usually in the exam, the question will make it clear whether the overdraft is intended to be long-term or short-term. If is does not, then you will get full marks whether or not you include it, but state your assumption).
alright, thx
You are welcome 🙂