Do you want BuboFlash to help you learning these things? Or do you want to add or correct something? Click here to log in or create user.


  • Presentation
  • Question
  • Answer

Tags
#cfa-level-1 #corporate-finance #reading-36-cost-of-capital
Question

WACC = wdrd(1 – t) + wprp + were  

where

wd = [...] when [...]

rd = the before-tax marginal cost of debt

t = the company’s marginal tax rate

wp = the proportion of preferred stock the company uses when it raises new funds

rp = the marginal cost of preferred stock

we = the proportion of equity that the company uses when it raises new funds

re = the marginal cost of equity

Answer
the proportion of debt that the company uses

it raises new funds

Tags
#cfa-level-1 #corporate-finance #reading-36-cost-of-capital
Question

WACC = wdrd(1 – t) + wprp + were  

where

wd = [...] when [...]

rd = the before-tax marginal cost of debt

t = the company’s marginal tax rate

wp = the proportion of preferred stock the company uses when it raises new funds

rp = the marginal cost of preferred stock

we = the proportion of equity that the company uses when it raises new funds

re = the marginal cost of equity

Answer
?

Tags
#cfa-level-1 #corporate-finance #reading-36-cost-of-capital
Question

WACC = wdrd(1 – t) + wprp + were  

where

wd = [...] when [...]

rd = the before-tax marginal cost of debt

t = the company’s marginal tax rate

wp = the proportion of preferred stock the company uses when it raises new funds

rp = the marginal cost of preferred stock

we = the proportion of equity that the company uses when it raises new funds

re = the marginal cost of equity

Answer
the proportion of debt that the company uses

it raises new funds
If you want to change selection, open original toplevel document below and click on "Move attachment"

Parent (intermediate) annotation

Open it
WACC = w d r d (1 – t) + w p r p + w e r e   where w d = the proportion of debt that the company uses when it raises new funds r d = the before-tax marginal cost of debt t = the company’s marginal tax rate w p = the proportion of preferred stock

Original toplevel document

2. COST OF CAPITAL
al. The weights in this weighted average are the proportions of the various sources of capital that the company uses to support its investment program. Therefore, the WACC, in its most general terms, is Equation (1)  <span>WACC = w d r d (1 – t) + w p r p + w e r e   where w d = the proportion of debt that the company uses when it raises new funds r d = the before-tax marginal cost of debt t = the company’s marginal tax rate w p = the proportion of preferred stock the company uses when it raises new funds r p = the marginal cost of preferred stock w e = the proportion of equity that the company uses when it raises new funds r e = the marginal cost of equity <span><body><html>

Summary

statusnot learnedmeasured difficulty37% [default]last interval [days]               
repetition number in this series0memorised on               scheduled repetition               
scheduled repetition interval               last repetition or drill

Details

No repetitions

Discussion

Do you want to join discussion? Click here to log in or create user.