Seeing is believing!
Before you order, simply sign up for a free user account and in seconds you'll be experiencing the best in CFA exam preparation.
Basic Question 4 of 14
Calculation of the weighted average cost of capital requires all of the following EXCEPT determination of the ______.
B. market value of bonds outstanding relative to the total market value of the firm
C. corporate tax rate
D. current market value of a firm's equity (by finding the total number of shares and the market value per share)
E. market value of equity outstanding relative to the total market value of the firm
A. total market value of a firm's debt (by determining the number of bonds outstanding and the current par value per bond)
B. market value of bonds outstanding relative to the total market value of the firm
C. corporate tax rate
D. current market value of a firm's equity (by finding the total number of shares and the market value per share)
E. market value of equity outstanding relative to the total market value of the firm
User Contributed Comments 2
| User | Comment |
|---|---|
| dlo1 | If the weighting of debt in the capital structure is based on the total market value of debt in the firm, then the number of bonds x current par value per bond is an inaccurate estimate of this weighting. The firm's debt is unlikely to be trading at par. |
| todolist | Bonds are unlikely to be trading at par, therefore calculating mkt value of debt at par is inaccurate. |
I used your notes and passed ... highly recommended!
Lauren
Learning Outcome Statements
calculate and interpret the weighted-average cost of capital for a company
CFA® 2024 Level I Curriculum, Volume 2, Module 6.