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June 2012 Q1

This topic has 1 reply, 2 voices, and was last updated 12 years ago by Ken Garrett.

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November 10, 2012 at 10:57 pm #55168
p5student
Member
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Please explain why the WAACC could not be calculated using the interest rate (8.4%) as the cost of debt and the 4.5% interest on deposit account as the cost of equity? I am a litte confused as to why the cost of capital was used.
November 11, 2012 at 8:45 am #106963
Ken Garrett
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- Topics: 10
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The overall cost of capital is the WAAC. Besides, I don’t think you can work out your own WAAC without knowing the market values of debt and equity and the cost of equity.
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