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Hello Sir,
June 2014, exam question Q1, Cantor Group, evaluate EVA , when calculate WACC, but D/E ratio is 30%, how to calculate ?
Thanks
D/E of 30% means a ratio of debt 30, equity 100. Total capital employed is therefore 130. To calculate WACC you would therefore use
Cost of debt x 30/130 + Cost of equity x 100/130
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