How do you calculate the market value of equity for WACC (Weighted Average Cost of Capital)?
Question:
How do you calculate the market value of equity for WACC (Weighted Average Cost of Capital)?
Weighted Average Cost of Capital
A company needs funds to finance its various projects. Funds can be availed from the debt capital of equity capital. The company analyses the cost of capital that will be incurred to fund the project. WACC calculation tells how expensive will be the funding a lower WACC means that the funding is cheaper compared to a higher WACC.
Answer and Explanation: 1
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View this answerThe market value of equity with WACC is calculated when the company divides the market value of the security of the company with the aggregate...
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Weighted Average Cost of Capital
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Chapter 14 / Lesson 5
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Weighted average cost of capital (WACC) is determined based on the cumulative funds of source, debt, and equity. Discover how WACC is weighed against the estimated rate of returns to determine a business' profitability.
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