Difference between revisions of "Four ways to weight capital"

From knowledgebase
Jump to navigation Jump to search
(Created page with "In the formula for the WACC: <math>\text{WACC} = W_D*C_{debt} + W_E*C_{equity}</math> With: <math>W_D</math> = Weight for debt <math>C_{debt}</m...")
 
Line 1: Line 1:
−
In the formula for the [[WACC|WACC]]:
+
Four ways to weight capital
−
 
 
−
<math>\text{WACC} = W_D*C_{debt} + W_E*C_{equity}</math>
 
−
 
 
−
With:
 
−
<math>W_D</math> = [[Weight for debt|Weight for debt]]
 
−
<math>C_{debt}</math> = [[Cost of Debt|Cost of Debt]]
 
−
<math>W_E</math> = [[Weigth for Equity|Weigth for Equity]]
 
−
<math>C_{equity}</math> = [[Cost of Equity|Cost of Equity]]
 
−
 
 
−
There are for ways to determine weight for capital:
 
−
 
 
−
# Book value
 
−
## <math>\text{Market Value(Equity)} = \text{Common Shares Outstanding} * {P_0}</math>
 
−
# Market value:
 
−
## <math>\text{Market Value(Debt)}</math>
 
−
# Marginal weights
 
−
##
 
−
# Target weights
 
−
## Based on ideal capital structure
 
−
## Single [[WACC|WACC]] based on that so called optimal structure
 
 
[[Category:finance]]
 
[[Category:finance]]
  

Revision as of 18:38, 27 August 2020

Four ways to weight capital