The WACC is the rate at which a companys future cash flows need to be discounted to arrive at a present value for the business. E market value total equity. In order to.
75 points total a A 14-year bond with an 8 percent semiannual coupon has a par value of 1000.
This metric is what we refer to as the weighted average cost of capital or WACC. Weighted Average Cost of capital takes into account the average of all the sources of finance being used by the business for the investment it includes the cost of. What is the companys marginal cost of debt rd. The WACC formula is EV x Re DV x Rd x.