[needhelpnow]

Rogers talks about Financial Management in his book, but in it, WACC seems simpler than all the other formulas. I am just wondering if there is anything else to WACC. The only example used in the book is:

Ex: If 40% of capital was obtained through long-term debt at an effective cost of 6%, 10% of capital was obtained by issuing preferred stock with an effective cost of 8%, and 50% of capital was obtained by issuing common stock expected to return 11% to S/Hs, the weighted average cost of capital is:

=40% x 6%+10% x 8%+50% x 11%

= 8.7%

I mean, literally the only example in the book. Is that all there is to WACC? I understand the Cost of Debt financing needs to be taken in to account if YTM and Effective tax rate is provided, but other than that, is that all usually? Thanks everyone..

[Anonymous]

Yes that's it! Feel free to post in the bec forum for more feedback.

[needhelpnow]

@cpa8488 thank you!

[Author]

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