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Cost of Capital
1
Amity Business School
Amity Business School
Calculation of WMCC
1. The WMCC is calculated on the basis of
market value weights because the new
funds are to be raised at the market
values.
2. The specific cost of capital can be
accurately calculated.
Amity Business School
Weightage Average Cost Of Capital
Q1. A firm has the following capital structure and after tax cost for the different sources of funds.
used
Q3.ANZ has a gearing ratio of 40%. Its cost of equity is 21% and cost of debt is 15%
Calculate the companys WACC
Q4. The required rate of return on equity is 16% and the cost of Debt is 12%. The firm
Has a capital structure mix of 60% equity and 40% debt. What should be the overall
rate of Return of the firm to maintain its market value