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The document details the calculation of the Weighted Average Cost of Capital (WACC) for a company, initially calculated at 10.80% and later revised to 10.14%. It includes various sources of capital such as equity, preference shares, debentures, and a term loan, along with their respective amounts and costs. The document also presents both book value and market value weights for the specific costs of capital contributing to the WACC.

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Kashish Premwani
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10 views

fmmm

The document details the calculation of the Weighted Average Cost of Capital (WACC) for a company, initially calculated at 10.80% and later revised to 10.14%. It includes various sources of capital such as equity, preference shares, debentures, and a term loan, along with their respective amounts and costs. The document also presents both book value and market value weights for the specific costs of capital contributing to the WACC.

Uploaded by

Kashish Premwani
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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KASHISH PREMWANI 231099 BCOM(H) - C

WEIGHTED AVERAGE COST OF CAPITAL

Sources No. of Units Price Amount


Equity Share Capital 5000 100 500000
9%Preference Share 2000 100 200000
10% Debentures 300000
1000000
WACC = 0.108 or 10.80%
GIVEN :-
Expected Dividend 9
Market Price Of Equity 102
Growth Rate 5%
Tax Rate 30%
Interest on Debenture 10
Market Price Of Equity(after expansion) 96
REVISED WEIGHTED AVERAGE COST OF CAPITAL

Sources No. of Units Price Amount


Equity Share Capital 5000 96 480000
9%Preference Share 2000 100 200000
10% Debentures 300000
12% Term Loan 500000
1480000
Revised WACC = 0.1014 or 10.14%
Book Value Weights Specific Cost Of Capital WACC
0.5 13.82% 0.069
0.2 9% 0.018
0.3 7% 0.021
0.108 0r 10.80%

ST OF CAPITAL

Market Value Weights Specific Cost Of Capital WACC


0.32 14.4% 0.047
0.14 9% 0.012
0.20 7% 0.014
0.34 8.40% 0.028
0.1014 or 10.14%

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