• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

Congratulations to Jamil from Pakistan and Jeeva from Malaysia - Global Prize winners!
see all ACCA December 2022 Genius Hunt Competition winners >>

Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>

WACC

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › WACC

  • This topic has 3 replies, 2 voices, and was last updated 7 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • December 4, 2015 at 10:41 am #287495
    dragon76
    Member
    • Topics: 50
    • Replies: 77
    • ☆☆

    Whichever theory (M&M without and with tax) you believe, whether there is
    or isn’t tax, provided the gearing ratio does not change the WACC will not change, it do not understand this statement in an Article due to although the Gearing ratios not change but the cost of equity and the cost of debt may change and the WACC shall change, is it right, pls. explain?

    December 4, 2015 at 2:09 pm #287536
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51532
    • ☆☆☆☆☆

    If the gearing ratio does not change, then there is no reason for the cost of equity or the cost of debt to change (the cost of equity will only change because of changes in gearing).

    Therefore if they keep to the same gearing ratio the WACC will not change.

    (What you may be confusing it with is that in the future costs may change because general interest rates go up or down, however this has nothing to do with changes in gearing. Gearing itself will only have an effect on the WACC if it changes.)

    I hope that makes it clear, but if not then I do suggest that you watch the Paper F9 lectures on ‘the effect of changes in gearing’.

    December 5, 2015 at 11:00 am #287797
    dragon76
    Member
    • Topics: 50
    • Replies: 77
    • ☆☆

    Much thanks Sir

    December 5, 2015 at 1:37 pm #287840
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51532
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

ACCA News:

 

ACCA My Exam Performance for non-variant Applied Skills exams is available NOW

NEW! Download the ACCA Pass Guide

FREE Verifiable CPD for ACCA Members

ACCA mock exams and debrief videos

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

Donate

If you have benefited from OpenTuition please donate.

ACCA CBE 2023 Exams

Instant Poll * How was your exam, and what was the result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • ksmigulec on Management of Working Capital  – Introduction – ACCA Financial Management (FM)
  • tmatanga2008@gmail.com on IASB Conceptual Framework – Introduction – ACCA Financial Reporting (FR)
  • John Moffat on Capital asset pricing model (part b) – ACCA Financial Management (FM)
  • John Moffat on Capital asset pricing model (part b) – ACCA Financial Management (FM)
  • palbu on Basic group structures – Impairment – ACCA (SBR) lectures

Copyright © 2023 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy