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hi, i wanted to know whether we include only long term debt in the formula of WAAC.. I attempt June 2010 YGV co and overdraft was omitted in the formula.
Hi there
It’s a good pointI have always taken in consideration Equity and Long Term Finance.
What about a ST Bank Loan where you have enough information on the Cost?Regards
Juan A.My understanding is bank loan is included in the WACC culculation, taking into consideration tax element, ie interest cost are tax deductible .
As for bank overdraft, i am not sure but i think it is regarded as short term borrowing for WACC culculating purposes. But then again in reality it can be a long term form of debt.
Pleas correct me if i am wrong.
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