Hello Sir,
from N217 of BPP Revision Kit I can see, that reserves were included into the calculation of WACC using book values. Is it correct?
Thank you so much in advance!
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WACC using book values
5y ago#1Yes it is correct.
Although we never use book values to calculate the WACC unless the question specifically says to do so (as does this question), the book value of equity is the share capital plus the reserves.
When we calculate the WACC using the market values, we do not include reserves because the market value effectively already includes the reserves.
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