Thursday, May 1, 2008

Weighted Average Capital Cost WACC

The cost of capital is used to determine the appropriate discount rate in NPV Analysis. It is the opportunity cost of funds employed.

Formula for Weighted Average Capital Cost (WACC):

To Calculate WACC Equation

WACC= (E/E+D)*Rs + (D/E+D)*Rd*(1-Tc)

What is Cost of Capital?

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