Difference between revisions of "Four ways to weight capital"

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Latest revision as of 19:24, 27 August 2020

In the formula for the WACC:

With: = Weight for debt = Cost of Debt = Weigth for Equity = Cost of Equity

There are for ways to determine weight for capital:

  1. Book value
  2. Market value:
  3. Marginal weights
  4. Target weights
    1. Based on ideal capital structure
    2. Single WACC based on that so called optimal structure