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WACC

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

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.
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  • January 19, 2018 at 12:31 pm #431273
    arunesh77
    Member
    • Topics: 3
    • Replies: 9
    • ☆

    Hi I just have a small doubt regarding cost of preference shares whether they are included in cost of equity for WACC calculation or in cost of debt.
    Thank you

    January 19, 2018 at 3:51 pm #431319
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54701
    • ☆☆☆☆☆

    They are not included in either.

    You calculate the cost of each source of finance separately – equity, preference shares, and each source of debt – and then take the weighted average of all of them.

    Do watch my free lectures on this. The lectures are a complete free course for Paper F9 and cover everything needed to be able to pass the exam well.

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