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Understanding Cost of Capital (WACC) by Charice Cortes is a document available to read on EtoBox.
This document discusses the weighted average cost of capital (WACC), which represents the minimum return a company must earn to satisfy its security holders. It provides formulas to calculate the components of WACC: cost of debt (Rd), cost of preferred stock (Rp), and cost of equity (Re). Rd is calculated as the before-tax cost of debt (rd) times 1 minus the tax rate. Rp is calculated as the preferred stock dividend divided by the stock price net of flotation costs. Re can be calculated using the Gordon Gro
- Author
- Charice Cortes
- Language
- EN