Topic 5- wacc Flashcards
1
Q
when calculating the market value of Vd in WACC, how do you do this?
A
trading value 105 ÷ $ 100 (nominal)
2
Q
post or pre cost of debit is used in the WACC Calculation
A
Post tax
3
Q
what is the post tax cost of debt formula?
A
Post tax cost of debt = Yield * (1-t)
4
Q
.what is the yield on debt?
A
Yield on debt = Pre-tax cost of debt for the Co
5
Q
.
A
.
6
Q
.
A
.
7
Q
.
A
.
8
Q
what is the formula for yield
A
Yield = Rf + Credit spread
both figures for the year that the debt is redeemable in
9
Q
what is credit spread
A
Credit spread is an assessment of credit risk (Moodys)
10
Q
how do you calculate weightd average
A
=(x * %)+(y*%)= 100% of xy
