Difference between revisions of "Four ways to weight capital"

Latest revision as of 19:24, 27 August 2020

In the formula for the WACC:

${\text{WACC}}=W_{D}*C_{debt}+W_{E}*C_{equity}$

There are for ways to determine weight for capital:

Book value
1. ${\text{Market Value(Equity)}}={\text{Common Shares Outstanding}}*{P_{0}}$
Market value:
1. ${\text{Market Value(Debt)}}$
Marginal weights
Target weights
1. Based on ideal capital structure
2. Single WACC based on that so called optimal structure

@@ Line 1: / Line 1: @@
-Four ways to weight capital
+In the formula for the [[WACC|WACC]]:
+<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]]