Subject category:
Finance, Accounting and Control
Published by:
IE Business School
Notes:
Access to IE multimedia items is provided to learners via a CoursePack or a link on your organisation's course area (Virtual Learning Environment or Learning Management System). Find out more >
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Abstract
This multimedia tutorial teaches students how to calculate the weighted average cost of capital (WACC). It also shows interactive graphs where the students can analyze the effects of equity beta, asset beta and the financing mix of the company on the WACC and the NPV. These graphs are complemented by several exercises. At the end of the tutorial, a simple practical case about the correct procedure to use for calculating the WACC when a company is going to float on the stock market is included. This section is complemented by links to websites where the financial information needed to complete the exercise can be found (equity betas from different sectors and their financing mix).
About
Abstract
This multimedia tutorial teaches students how to calculate the weighted average cost of capital (WACC). It also shows interactive graphs where the students can analyze the effects of equity beta, asset beta and the financing mix of the company on the WACC and the NPV. These graphs are complemented by several exercises. At the end of the tutorial, a simple practical case about the correct procedure to use for calculating the WACC when a company is going to float on the stock market is included. This section is complemented by links to websites where the financial information needed to complete the exercise can be found (equity betas from different sectors and their financing mix).