WACC
Example - A firm has $2 mil of debt and 100,000 of
outstanding shares at $30 each. If they can borrow at 8% and
the stockholders require 15% return what is the firm’s
WACC? D = $2 million
E = 100,000 shares X $30 per share = $3 million
V = D + E = 2 + 3 = $5 million
. 122 or 12.2%
52.^0853.^15
== × + ×
WACC = VD ×rD + VE × rE