hassan

Debt to Equity Ratio = 0.30, so Debt/Equity=0.3

and Debt+Equity = 1.0

So Debt = 1-Equity

or 1/Equity -1 =0.3
or Equity = 1/1.3 = 0.76923 and debt = 0.23077.

So Dreary is incorrect in saying : "WACC = 0.30 ((0.10)(0.7) + 0.70 (0.18) = 14.7%"

It should be 0.77*18+0.23*10*0.7 = 15.475



Edited 2 time(s). Last edit at Saturday, May 22, 2010 at 08:19PM by janakisri.