D: market value of the firm's debt
PVOL: Present value of operating lease
rd: (pretax) cost of debt = debt yield = interest rate on operating lease (in this case)
t: corporate tax rate
E: market value of the firm's equity
re: cost of equity
Wednesday, May 4, 2011
Weighted Average Cost of Capital (WACC)
WACC = (D+PVOL)/(E+D+PVOL) * rd * (1-t) + E/(E+D+PVOL) * re
D: market value of the firm's debt
PVOL: Present value of operating lease
rd: (pretax) cost of debt = debt yield = interest rate on operating lease (in this case)
t: corporate tax rate
D: market value of the firm's debt
PVOL: Present value of operating lease
rd: (pretax) cost of debt = debt yield = interest rate on operating lease (in this case)
t: corporate tax rate
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