Weighted Average Cost of Capital

Question 1

Weighted Average Cost of Capital

Answer 1

A firm’s overall required return on the firm as a whole

Expressed as a percentage

Question 2

WAAC

Answer 2

WAAC= (E/V) x Re + (D/V) x Rd x (1-Tc)

E= Market Value of Equity
D = Market Value of Debt
V = E+D
Tc= Corporate tax rate
Re = Cost of Equity
Rd = Cost of Debt

Question 3

Cost of Debt

Re

Answer 3

Yield to maturity of Outstanding Debt