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Floating rate debt

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Floating rate debt

  • This topic has 1 reply, 2 voices, and was last updated 11 years ago by John Moffat.
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  • May 26, 2014 at 9:13 am #170880
    hasanali95
    Member
    • Topics: 239
    • Replies: 248
    • ☆☆☆

    Just curious to know how we would calculate WACC when the co. has a floating rate debt?

    May 26, 2014 at 6:57 pm #171029
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54737
    • ☆☆☆☆☆

    For exams you would use a forecast ‘average’ rate.

    In practice you would probably calculate the WACC (and therefore the NPV) using different possible rates and then use judgement as to whether or not to risk investing.

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