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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 youThey 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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