Featured Announcements. The parents of Travis William Tennessen and Morgan Lee Holz are proud to announce the engagement of their children. Morgan, daughter of Bill and Nancy Holz, is a 2015 graduate from the University of Wisconsin - Oshkosh where she earned...
Weighted Average Cost of Capital or WACC. The WACC calculation is a calculation of a companyâs cost of capital in which each category of capital is equally weighted. All capital sources such as common stock, preferred stock, bonds and all other long-term debt are included in this calculation.urrently, Chevronâs has a Cost of Equity or R Equity of 6.72% so investors should expect to get a return of 6.72% per-year average over the long term on their investment to compensate for the risk they undertake by investing in this company. (Please note that this is the CAPM approach to finding the cost of equity.
Weighted Average Cost of Capital The weighted average cost of capital (WACC) is a common topic in the financial management examination. This rate, also called the discount rate, is used in evaluating whether a project is feasible or not in the net present value (NPV) analysis, or in assessing the value of an asset. Previous examinations have revealed that many students fail to understand how to calculate or understand WACC. WACC is calculated as follows: WACC = E/V x Re + D/V x Rd x (1-tax rate) WACC is the proportional average of each category of capital inside a firm â common shares, preferred shares, bonds and any other long-term debt â where: Re = cost of equity Rd = cost of debt E = market value of the firmâs equity D = market value of the firmâs debt V = E + D = firm value E/V = percentage of financing that is equity