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WACC for a private limited company!!

ArdLawd · 2012-04-29 07:53:20

Hello, Does anyone know how to calculate the WACC for an ltd? When i look at my textbooks they all seem to be for a plc and it looks like some of the factors required aren't going to be identifiable for an ltd!!

29-04-2012 7:53am

#1
ArdLawd

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Join Date: August 2011

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Hello,
Does anyone know how to calculate the WACC for an ltd? When i look at my textbooks they all seem to be for a plc and it looks like some of the factors required aren't going to be identifiable for an ltd!!

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wacc

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#2 29-04-2012 11:45am

SBWife

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You still need a cost of debt and a cost of equity along with the proportion of each used for financing.

Cost of debt should be relatively straight forward, interest rate paid on borrowings, adjusted to account for the tax sheild provided.

For cost of equity you can use the ungeared Beta of a comparable PLC adjusted with an additional risk premium to account for the firm's non-traded status. Plug this into your CAPM and you should have a cost of equity.

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