Skip to content
ACCA exam results — Are you ready?Chat about it >>

Ask the Tutor ACCA FA

WACC calculate question

LLawrence5y ago
Good afternoon, my question is I don't know how to calculate the cost of capital of WACC. Here is the question. B1 100,000 bonds with coupon rate of 8% (paid semi-annually), a price quote of 120 and have 30 years to maturity. Semi-annual YTM is 3.24%. B2 100,000 zero coupon bonds (semi-annual compounding) with a price quote of 30 and 20 years until maturity. PS: 200,000 shares of 5 percent preferred stock with a current price of $70, and a par value of $100. Stock: 5,000,000 shares of common stock, with a price of $60, and a beta of 1.2. Market: The corporate tax rate is 40 percent, the market risk premium is 8%, and the risk-free rate is 3%. I find that the cost of capital for debt formula is (D/V)*Rd*(1-Tc), but there is no Rd and Re in the question, how could I find them? Thank you.
John MoffatJohn MoffatTutor5y ago#1
Calculating the cost of capital is not in the syllabus for Paper FA - it is nothing to do with financial accounting.
This topic is locked — no new replies.