Four ways to weight capital
Revision as of 07:40, 25 August 2020 by Dirkjan (talk | contribs) (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...")
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:
- Book value
- Market value:
- Marginal weights
- Target weights
- Based on ideal capital structure
- Single WACC based on that so called optimal structure