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    sillk's Avatar
    sillk Posts: 1, Reputation: 1
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    #1

    Feb 20, 2009, 09:26 PM
    Weighted average cost of capital
    I'm trying to calculate the weighted average cost of capital to the table below;

    Assets $100

    Debt $10
    Equity $90


    Debt/assets after tax cost of debt cost of equity cost of capital
    0% 8% 12%
    10% 8 12
    20% 8 12
    30% 8 13
    40% 9 14
    50% 10 15
    60% 12 16
    berlinevi's Avatar
    berlinevi Posts: 6, Reputation: 1
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    #2

    Feb 23, 2009, 09:43 AM
    0%(0.0)(0.08)+(1.0)(0.12)=0.120
    10%(0.1)(0.08)+(0.9)(0.12)=0.116
    20%(0.2)(0.08)+(0.8)(0.12)=0.112
    30%(0.3)(0.08)+(0.7)(0.13)=0.115
    40%(0.4)(0.09)+(0.6)(0.14)=0.120
    50%(0.5)(0.10)+(0.5)(0.15)=0.125
    60%(0.6)(0.12)+(0.6)(0.16)=0.136

    The cost of capital is a weighted average:
    k= (weight)(cost of debt) + (weight)(cost of equity)
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