00:01
Hello students, we are given a question here.
00:02
Calculate wacc, okay? so we are given here some terms as the capital structure, weights are 50 percentage depth and 50 percentage equity.
00:13
The interest rate on depth is 10%.
00:16
The required rate or rate to equity holders is 20 percentage and the tax rate is given as 30 percentage.
00:24
Okay.
00:25
Now here we are supposed to know that what we can state that the the cost of depth cost of depth students cost of depth the kd can be written as equal to interest times interest times one minus tax okay so here interest is given as 10 percentage so basically 10 and times 10 percent okay students one minus tax rate is 70 percent sorry 30 percentage so we can write here 0 .30 so what we will get 10 percentage times 0 .7 so it can be written as 7 percentage okay students now here we are supposed to know that the cost of equity cost of equity can be written as k e k e is nothing but equal to 20 percentage okay so basically here w ac cc can be written as wacc is nothing but the weighted average cost of capital.
01:34
It can be written as equal to ke times wee plus kd times wd.
01:42
Okay, students.
01:44
Here we are supposed to know that k is the cost of equity which is given as 20 percentage or can be written as 0 .20.
01:51
Okay, students.
01:53
So we will not convert it in a point decimal initially.
01:58
And here we are supposed to know that what is we? w is nothing what the weight of equity.
02:04
Weight of equity.
02:08
So it is given as equal to 50 percentage...