thecostofcapital(英文版)-文庫(kù)吧
2025-02-07 07:53 本頁(yè)面
【正文】 has the following structure. Given that geothermal pays 8% for debt and 14% for equity, what is the Company Cost of Capital? %=(.7x14%)+(.3x8%)= ReturnPortfolio169。The McGrawHill Companies, Inc.,2023 11 7 Irwin/McGrawHill Cost of Capital Example Geothermal Inc. has the following structure. Given that geothermal pays 8% for debt and 14% for equity, what is the Company Cost of Capital? %=(.7x14%)+(.3x8%)= ReturnPortfolioInterest is tax deductible. Given a 35% tax rate, debt only costs us % (. 8 % x .65). %=(.7x14%)+(.%)= WA CC169。The McGrawHill Companies, Inc.,2023 11 8 Irwin/McGrawHill WACC Weighted Average Cost of Capital (WACC) The expected rate of return on a portfolio of all the firm’s securities. Company cost of capital = Weighted average of debt and equity returns. 169。The McGrawHill Companies, Inc.,2023 11 9 Irwin/McGrawHill WACC r a s s e t s ( D x r ) + ( E x r )Vd e b t e q u i t y= ( ) ( )r x r x rassets DV d eb t EV eq u ity= +r =a s s e t s t o t a l i n c o mev a l u e o f i n v e s t m e n t s169。The McGrawHill Companies, Inc.,2023 11 10 Irwin/McGrawHill WACC Three Steps to Calculating Cost of Capital 1. Calculate the value of each security as a proportion of the firm’s market value. 2. Determine the required rate of return on each security. 3. Calculate a weighted average of these required returns. 169。The McGrawHill Companies, Inc.,2023 11 11
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