Talk:Weighted average cost of capital
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 | The contents of the Weighted cost of capital page were merged into Weighted average cost of capital. For the contribution history and old versions of the redirected page, please see its history; for the discussion at that location, see its talk page. |
| The contents of the Marginal cost of capital schedule page were merged into Weighted average cost of capital on 10 November 2017. For the contribution history and old versions of the redirected page, please see its history; for the discussion at that location, see its talk page. |
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editwhat is the cost of capital in relation to property and what does property investors do with the cost of capital.and finally how do property owners calculate the cost of capital.
- The weighted cost of capital employed in real property transactions is calculated the same way as any other weighted cost. You look at all your sources of capital, eg.: mortgages, loans, money from other investors in the case of a limited partnership, and the opportunity cost of money you contribute personally. You determine what rate of interest that is being charged in each case, and you determine the percentage of total capital that comes from each source. Then you multiply each rate charged by the percentage weighting and sum accross all sources. mydogategodshat 15:32, 5 Aug 2004 (UTC)
Organization
editI think it's "weighted average cost of capital" that should be merged with cost of capital. - Jerryseinfeld 18:49, 21 Dec 2004 (UTC)
- I just merged the two. If you think it should be the opposite, then why don't you merge them the opposite way instead of more or less reverting them the way they were?
--pgeoff 20:26, Dec 21, 2004 (UTC)
- Do you think there's overlap? - Jerryseinfeld 01:22, 22 Dec 2004 (UTC)
- You bet I do. It was a good call on your part to suggest that they be merged in the manner that you suggest. Meaning that Weighted average cost of capital be merged into Cost of capital. I should have done that myself but I did it backwards. If you want, I still can. However, be my guest! --pgeoff 20:08, Dec 22, 2004 (UTC)
- Do you think there's overlap? - Jerryseinfeld 01:22, 22 Dec 2004 (UTC)
Income Taxes on WACC
editHi. I was wondering if I could get some help on an economics question I have. Does anyone know the effects of Income Taxes on WACC? I greatly appreciate all your help.
Matt
Hello Matt, income taxes and WACC are a really difficult topic. You will find something in a book written by a colleague and myself: DCF, [1], chapter 3 or you look for some discussion papers ([2], now published in The European Journal of Finance).
Andreas Loeffler.
Simple, WACC is simply the cost of new capital derived by averaging the weights of debt and equity in the capital structure. So then the impact of taxes is this. If a company pays a dividend that is after tax dollars and if they pay interest on a bond they expense the cost of the interested as part of doing business by expensing this reduces tax liability. From a tax perspective a capital structure of more bonds than stock would then be better.
formulae
editPlease correct the appearance in the page , something went wrong... --YoavD 07:49, 21 January 2007 (UTC)
In regards to the symbols used on the formula: I have consistently seen (In Brealey and Myers textbook, as well as several other sources online) the following symbols used to denote the components of WACC: Cost of Debt: rD, Cost of Equity: rE, Market Value of Equity: E, Market Value of Debt: D, Total Firm Value (D+E): V
Are these the most common, global symbols used? I would like to change the formulas on the WACC page to reflect these if that is the case. Flammulated (talk) 22:07, 15 February 2009 (UTC)Flammulated
Proposed Merger
editThis page deals with exactly the same subject as the page on the weighted cost of capital. 220.233.7.5 (talk) 10:52, 23 May 2010 (UTC)