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Wacc ???

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(Querist)
10 January 2012 Capital structure of AB Ltd is
Debt 60%
Equity 40%
Interest rate on debt is 6.5% and risk free return (Rf ) 5% and risk premium is 6% and bita of firm is 1.2 and tax rate is 40 %
Then Weighted Average cost of capital is(WACC) ?

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CA VISHAL RANA,CS,B.Com,AMFI

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CA VISHAL RANA,CS,B.Com,AMFI (Expert)
10 January 2012 1.Ke=5+1.2*6= 12.2%(CAPM model)

2.Kd=6.5%(1-0.40)=3.9%

3.WACC=Wd*Kd+We*Ke

WACC=0.60*3.90+0.40*12.2= 7.22%

WACC= 7.22% answer
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Armman

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Armman (Querist)
11 January 2012 thank you sir for reply
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