Difference between revisions of "Wacc"

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[[Category:Financial library functions]]
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==Function Wacc(debt, equity, rD, rE, tC) ==
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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.
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[[Syntax]]:
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:[[Wacc]](debt, equity, rD, rE, tC: Numeric)
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Parameters:
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;«debt»: the market value of debt
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;«equity»: the market value of equity
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;«rD»: the expected return on debt
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;«rE»: the expected return on equity
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;«tC»: the corporate tax rate
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Definition:
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:<code>(((1 - tC)*debt*rD)/(debt + equity)) + ((equity*rE)/(debt + equity))</code>
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==Library==
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[[Financial library functions]] ([[media:Financial Library.ana|Financial Library.ana]])
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:Use [[File menu|File]] &rarr; '''Add Library...''' to add this library
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==Example==
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:<code>Wacc(1000000, 3000000, 0.08, 0.16, 0.35)  &rarr; 0.133</code>
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==See Also==
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* [[Capm]]
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* [[Putoption]]
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* [[Pvperp]]
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* [[Rate]]
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* [[media:Financial Library.ana|Financial Library.ana]]
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* [[Financial library functions]]
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* [[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.

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:

(((1 - tC)*debt*rD)/(debt + equity)) + ((equity*rE)/(debt + equity))

Library

Financial library functions (Financial Library.ana)

Use FileAdd Library... to add this library

Example

Wacc(1000000, 3000000, 0.08, 0.16, 0.35) → 0.133

See Also

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