Principles of Corporate Finance

Capital Structure & COC

COC = rportfolio = rassets

rassets = WACC = rdebt (D) + requity (E)
(V) (V)

Bassets = Bdebt (D) + Bequity (E)
(V) (V)

requity = rf + Bequity ( rm - rf )

IMPORTANT

E, D, and V are

all market values