- This topic has 2 replies, 2 voices, and was last updated 6 years ago by
.
- Posts
Hi,
Really stuck with a question from Kaplan’s F2 exam kit even after looking at the answer! Please help!
W’s cost of equity = 15%, yield on debt is 8%. Debt to equity ratio is 1:3 based on book value and 1:4 on market value. Tax = 25%. Calc the WACC!
Looking forward to your help!
Regards,
Samir
Hi,
You need to lay it out in the way in which we have in the notes. You’re given the cost of equity, the cost of debt needs to be post-tax, and then use the market value of equity as 4 and the market value of debt as 1.
You should then be able to work out the cost multiplied by the market values and total them up. The WACC can then be worked out from this and the total market value of 5 (4 + 1).
Give it a go and see how you get on. If you’re still struggling then just let me know.
Thanks
- The topic ‘Kaplan exam kit wacc q 24’ is closed to new replies.