On 5/30/11, bc070400666 HINA ASHRAF <bc070400666@vu.edu.pk> wrote:
> I need the SOLVED ass no.2 of MGT4111
>
> On 5/30/11, afaaq <afaaqtariq233@gmail.com> wrote:
>> *
>>
>> WACC if the Debt-equity Ratio of Company is .5
>> WACC=.11(1/1.5) + .09(.5/1.5)(1-.35)
>> WACC=.11(.666666666) + .09(.333333333)(.65)
>> WACC=.073333333 + .03(.65)
>> WACC=.073333333 + .0195
>> WACC=.092833333
>> WACC=9.28%
>> WACC if the Debt-equity Ratio of Company is 1.0
>> WACC=.11(1/2) + .09(1/2)(1-.35)
>> WACC=.11(.5) + .09(.5) (.65)
>> WACC=.055 + ..045(.65)
>> WACC=.055+.02925
>> WACC=.08425
>> WACC=8.42%
>> WACC if the Debt-Equity Ratio of Company is 2.0
>> WACC=.11(1/3) + .09(2/3)(1-.35)
>> WACC=.11(.333333333) + .09(.666666666)(.65)
>> WACC=.036666666 + .06(.65)
>> WACC=.036666666 + .039
>> WACC=.075666666
>> WACC=7.56%
>> Trend of WACC With increasing D/E Ratio
>> Increase in Debt or Debt-equity Ratio decreases the WACC
>> *
>>
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>> Best regard's
>> Muhammad Afaaq
>> MBA 4th (Final Semester) Finance Group
>> Afaaq_Tariq@yahoo.com
>> Islamabad
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