WACC formula calculations
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I need your help with this formula: WACC=50x0.12+10x0.08+20X0.06x(1-0.35)=$7.58 Million
My first question is where does the 1 come from and how do I calculate the figures in parenthesis?
And can you help me with the rest of the problem.
Thank you your help is GREATLY appreciated.
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Solution Summary
The expert examines WACC formula calculations. The percentages of debt is determined.
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We can show weighted average cost of capital (WACC) this way :
WACC= we x kce + wps x kps + wd x kd x (1-T)
kce = cost of common stock
kps = cost of preferred stock
kd = cost of debt
we= percentage of common stock in the capital structure
wps= percentage of preferred stock
wd= percentage of ...
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