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WACC – Tisa Co (Jun 2012)

This topic has 1 reply, 2 voices, and was last updated 2 years ago by John Moffat.

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March 21, 2023 at 12:56 pm #681605
phuongmore
Participant
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Dear Sir,
In the answer of question on Tisa Co (Jun 2012) for calculation of WACC :
1.217 = component asset beta x 0.25 + 1.078 x 0.75
I do not understand where 0.25 and 0.75 come from ? Please help me to explain.
Thank you
March 22, 2023 at 8:50 am #681640
John Moffat
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The answer is taking the weighted average of the betas for component and other activities.
It is the equity that carries the risk, and the question says that 75% of the equity relates to other activities (and therefore 25% relates to component production).
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