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Understanding WACC and CAPM in Finance by Tomas Gutierrez Ruegg is a document available to read on EtoBox.
What is Understanding WACC and CAPM in Finance about?
The weighted average cost of capital can be calculated using the formula WACC = (E/V) * Ke * (1-T) + (D/V) * Kd, where Ke is the cost of equity, Kd is the cost of debt, T is the tax rate, E is the total market value of equity, D is the total debt, and V is the total firm value. The capital asset pricing model estimates the cost of equity as Ke = Rf + βe * (Rm - Rf), where Rf is the risk-free rate, βe is the equity beta, and Rm is the expected return on the market portfolio. Firm value equals the total value
- Author
- Tomas Gutierrez Ruegg
- Language
- EN