Wacc
Function Wacc(debt, equity, rD, rE, tC)
Calculates the after-tax weighted average cost of capital, based on the expected return on a portfolio of all the firm's securities. Used as a hurdle rate for capital investment.
- Wacc(debt, equity, rD, rE, tC: Numeric)
Parameters:
- «debt»
- the market value of debt
- «equity»
- the market value of equity
- «rD»
- the expected return on debt
- «rE»
- the expected return on equity
- «tC»
- the corporate tax rate
Definition:
(((1 - tC)*debt*rD)/(debt + equity)) + ((equity*rE)/(debt + equity))
Library
Financial library functions (Financial Library.ana)
- Use File → Add Library... to add this library
Example
Wacc(1000000, 3000000, 0.08, 0.16, 0.35) → 0.133
See Also
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