Difference between revisions of "Wacc"
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+ | ==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. | ||
+ | |||
+ | [[Syntax]]: | ||
+ | :[[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: | ||
+ | :<code>(((1 - tC)*debt*rD)/(debt + equity)) + ((equity*rE)/(debt + equity))</code> | ||
+ | |||
+ | ==Library== | ||
+ | [[Financial library functions]] ([[media:Financial Library.ana|Financial Library.ana]]) | ||
+ | :Use [[File menu|File]] → '''Add Library...''' to add this library | ||
+ | |||
+ | ==Example== | ||
+ | :<code>Wacc(1000000, 3000000, 0.08, 0.16, 0.35) → 0.133</code> | ||
+ | |||
+ | ==See Also== | ||
+ | * [[Capm]] | ||
+ | * [[Putoption]] | ||
+ | * [[Pvperp]] | ||
+ | * [[Rate]] | ||
+ | * [[media:Financial Library.ana|Financial Library.ana]] | ||
+ | * [[Financial library functions]] | ||
+ | * [[Financial functions]] |
Latest revision as of 20:52, 24 May 2016
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
Comments
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