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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA APM Exams › WACC for Residual Income & EVA
Good Morning
Can I check my understanding of Wacc if initial calculations using the book values of debt & equity.
The book value of debt is $1,500 and book value of equity as total assets less total liabilities – $15,400. Equity Cost of capital is 15% and Interest 10%.
If I use these figures I get a WACC of 14.29%
Kd (1-T) * Vd (0.07 * 8.9) = 0.623
Ke * Ve (0.15 * 91.1) = 13.665
I also get the same when I use the F9 WACC formulae from your notes, is this the correct method?
Much appreciated.
That is the correct way to calculate WACC.
Gromit you are wonderful, thank you for your time 🙂