Great explanation of a difficult concept. Patrick is amazing at explaining all things fin 300/401 related. I highly recommend using his resources. -Dan
This was so helpful, thanks!!! I find finance quite difficult to grasp but you broke it down AMAZINGLY. Wish my uni had profs with your teaching style...
Thank you Sir, you’re explanation is superb clear and it helps me on my MBA Corporate Finance. It has been a year I keep watching your videos on finance matters. 💕 you.
My apologies, for the (5) cost of debt section, the PMT and FV should be negative because of the fund is being paid out to the lenders instead of positive?
You have been newly externally appointed as Project Director in a fast growing South-African company. You occupied your office a week ago, and still finding your feet. The company’s main business focus was, since inception 5 years ago, to the Southern African market. The Company realised that the growth potential is limited and a new strategy was presented to the board 9days ago. The strategy is to expand the business internationally via 4 phases, the first phase is expansion into Europe, the second phase is North America, 3rd phase is Australasia and the 4th phase is Asia. This strategy will be implemented over a 4 year period, and a year is allocated for each phase. The Board Approved US$5 Billion of capital for various expansion projects equally spread over the 4 regions. These projects will be implemented as a programme. You have been summoned to the CEO’s office and have been given the task to prepare a proposal within a week to advise the board on the following: 1. Determine a Weighted Cost of Capital (WACC) for the overall 4 year expansion programme. 2. Determine a WACC for each region. 3. Provide Scenario that might impact the WACC per region. Highlight to the Board what ground rules are certain/uncertain and what is controllable/no control. 4. Risks with the WACC calculation principles as well as the WACC approach. 5. Provide a firm proposal with two alternatives 6. Detail Assumptions as part of Appendixes. 7. SpreadsheetwithcalculationsalsopartofAppendixes The Board had discussion with the major shareholders and they require a minimum 15% rate of return on their investment. The stock is currently trading at $10 and will pay a dividend of $0.30. The Board gave a guideline that the Debt/Equity ratio should be between 30% and 40%. The Company existing capitalisation is valued at US$ 15bn without the new investment and one million shares are issued. The corporate tax rate is 30%, the existing debt/equity ratio is 32% and the new expansion projects will be financed on your recommendation by debt, common stock, preferred stock and retained earnings.The CFO advised you at the meeting that the cost of common stock, preferred stock and retained earnings are 24%, 10% and 20% respectively and wish to sign-off on all calculations to determine weighted average cost of equity. The CFO also provided you with in-country studies of cost of debt. The European financier was only prepared to finance 25% of capital at an interest of 9%/a on the proviso that financing will only apply to projects in Europe. Canadian Financiers were prepared to finance for all phases at 18%/a to a maximum of 42% capital. Asian Financiers was prepared to finance projects in Asia and Australasia at 15% interest to a maximum of 20% Capital requirements. All loans are for a 10year term. The Board approved that the stock split will be 50%, 25% and 25%, for common stock, preferred stock and retained earnings, respectively. The feasibility of all the projects in the programme will be prioritised using the results of your proposal.
How do i calculate the wacc for a company if i dont have the numbers. Here is the question : (a) “Compute the Weighted Average Cost of Capital (WACC) for Norwegian as of August 30, 2018. Assume that the risk-premium is 5%. Make other assumptions as you see fit.” Please help me.
Abby’s Motor finances its long-term investment with bond and common stock. The firm has a total of 2,500 units of bond selling at 115% of its par value at a cost of 10%. Currently, the firm has 105,000 shares of common stock outstanding that sells at$35 per share with an expected dividend of $4.25 that grows forever at 5%. The firm’s tax rate is 28%. What is the weighted average of costs of capital of Abby’s Motor? >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Anna Berhad has 210,000 shares of common stock outstanding at a market price of $36 a share. Last month, Anna paid an annual dividend in the amount of $1.593 per share. The dividend growth rate is 4%. Anna also has 6,000 bonds outstanding with a face value of RM 1,000 per bond. The bonds are selling at 99% of face value at cost of 7.25%. The company's tax rate is 34%. What is Anna's weighted average cost of capital? can you help me to get answers for these questions Thank you
What happens to the WACC, when in an effort to raise more capital a company takes on additional debt while mainting it's existing debt but at a different coupon rate? Do you calculate the WACC using the different weighted averages of each debt or calculate the weighted average of the combined debt using a weighted/average coupon rate?
Hi everyone, check out www.FIN401.com to see more of my free videos on WACC.
The absolute best breakdown of WACC. Big thanks, this explanation is exactly what I needed to understand.
Wow... For two years this was always a foreign language... you just made my mother tongue... I feel like a genius... Great Class_Thank you
Great explanation of a difficult concept. Patrick is amazing at explaining all things fin 300/401 related. I highly recommend using his resources.
-Dan
This was so helpful, thanks!!! I find finance quite difficult to grasp but you broke it down AMAZINGLY. Wish my uni had profs with your teaching style...
The way you explained better than my lecturer. Thank you.
I feel the same too clear explanation
Thank you Sir, you’re explanation is superb clear and it helps me on my MBA Corporate Finance. It has been a year I keep watching your videos on finance matters. 💕 you.
this is fantastic by mentioning every trick that we may meet in a real question! thx
Finally understood WACC, each and every breakdown very well explained, thank you so much
Thanks very very very much ! It's so good making a difficult problem more easy to understand !
this made my life so much easier near the finals, hard topics explained by proff, easily explained by AllThingsMathematics
I think you are the best accounting tutor in the world by making things easy.
God bless you ....you made it easy for me to understand.
oh my god!!!! You are the best. best breakdown ever!!!!!!
Thanks for your amazing explanation... i have now cracked the examiners code on WACC!!! Big up to you...
Thank you so much Sir!!
I have my corporate finance final tomorrow and all I need is an 80% to get an A
This guy is just great!!! You make this so simple..Thank You!
Thank you! You made it sooo easy for me to understand.
Thanks! Best explanation of the wacc formula!
thanks sir!
These videos are really important for us to identify examiner's tricks used in questions.
Great breakdown, it makes a whole lot of sense now
You are a grade saver, Sir!
Happy to hear that :)
This is so easy to understand. Why didn't I get this when we had our exams.😔😔😔 Wish you were our teacher. 🤗🤗🤗 Please make more videos on finance.
More than appreciated!!!
When calculating D (debt), do you only include bonds? What if the company has loans?
I wish I found you earlier, my MBA finance would be so much easier! Thank you!
A nice teacher could motivate a student a lot.
you're amazing. much love
That was extremely helpful. Thank you
Thank you for your Vedio it has helped me alot. I don't have a lecture because I can't afford tutorials . Just studying on my own for the exam.
glad its helping :)
Thank you man much appreciated
My apologies, for the (5) cost of debt section, the PMT and FV should be negative because of the fund is being paid out to the lenders instead of positive?
You have been newly externally appointed as Project Director in a fast growing South-African company. You occupied your office a week ago, and still finding your feet. The company’s main business focus was, since inception 5 years ago, to the Southern African market. The Company realised that the growth potential is limited and a new strategy was presented to the board 9days ago.
The strategy is to expand the business internationally via 4 phases, the first phase is expansion into Europe, the second phase is North America, 3rd phase is Australasia and the 4th phase is Asia. This strategy will be implemented over a 4 year period, and a year is allocated for each phase.
The Board Approved US$5 Billion of capital for various expansion projects equally spread over the 4 regions. These projects will be implemented as a programme.
You have been summoned to the CEO’s office and have been given the task to prepare a proposal within a week to advise the board on the following:
1. Determine a Weighted Cost of Capital (WACC) for the overall 4 year expansion programme.
2. Determine a WACC for each region.
3. Provide Scenario that might impact the WACC per region. Highlight to the
Board what ground rules are certain/uncertain and what is controllable/no
control.
4. Risks with the WACC calculation principles as well as the WACC
approach.
5. Provide a firm proposal with two alternatives
6. Detail Assumptions as part of Appendixes.
7. SpreadsheetwithcalculationsalsopartofAppendixes
The Board had discussion with the major shareholders and they require a minimum 15% rate of return on their investment. The stock is currently trading at $10 and will pay a dividend of $0.30.
The Board gave a guideline that the Debt/Equity ratio should be between 30% and 40%. The Company existing capitalisation is valued at US$ 15bn without the new investment and one million shares are issued. The corporate tax rate is 30%, the existing debt/equity ratio is 32% and the new expansion projects will be financed on your recommendation by debt, common stock, preferred stock and retained earnings.The CFO advised you at the meeting that the cost of common stock, preferred stock and retained earnings are 24%, 10% and 20% respectively and wish to sign-off on all calculations to determine weighted average cost of equity.
The CFO also provided you with in-country studies of cost of debt. The European financier was only prepared to finance 25% of capital at an interest of 9%/a on the proviso that financing will only apply to projects in Europe. Canadian Financiers were prepared to finance for all phases at 18%/a to a maximum of 42% capital. Asian Financiers was prepared to finance projects in Asia and Australasia at 15% interest to a maximum of 20% Capital requirements. All loans are for a 10year term.
The Board approved that the stock split will be 50%, 25% and 25%, for common stock, preferred stock and retained earnings, respectively.
The feasibility of all the projects in the programme will be prioritised using the results of your proposal.
Thank you sir.
I need some information, when any debts book value & market value given, nothing tell how to calculate. then how to calculate???
Great video. Absolutely worth watching!
Thanks man for this video!
Yassssss! JUST WHAT I NEEDED
This was so helpful! Thank u!
Thank u soo much 🌹 But LOL i can't concentrate on the lesson u soo handsome 😻
thank youuuuuuu such a high quality video
Best explanation!!!!!
Excellent
Thank you so much 😀
hell yeahhhh thank you for the video !!!
You are excellente I study very well thank u very much your great explain 💜️💜️
How do i calculate the wacc for a company if i dont have the numbers. Here is the question :
(a) “Compute the Weighted Average Cost of Capital (WACC) for Norwegian as of August 30, 2018. Assume that the risk-premium is 5%. Make other assumptions as you see fit.”
Please help me.
Abby’s Motor finances its long-term investment with bond and common stock. The firm
has a total of 2,500 units of bond selling at 115% of its par value at a cost of 10%. Currently,
the firm has 105,000 shares of common stock outstanding that sells at$35 per share with
an expected dividend of $4.25 that grows forever at 5%. The firm’s tax rate is 28%.
What is the weighted average of costs of capital of Abby’s Motor?
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Anna Berhad has 210,000 shares of common stock outstanding at a market price of $36 a share. Last month, Anna paid an annual dividend in the amount of $1.593 per share. The dividend growth rate is 4%. Anna also has 6,000 bonds outstanding with a face value of RM 1,000 per bond. The bonds are selling at 99% of face value at cost of 7.25%. The company's tax rate is 34%. What is Anna's weighted average cost of capital?
can you help me to get answers for these questions
Thank you
Thank you, very detail explanation.
best explanation ever
Thank you.
best explanation I have seen thnks
You are a saint! Thank you!
Just want to let you know your work is amazing
thanks so much for the compliment!
GOOD video ,,,how can I calculate the WACC given owners equity,assets and liabilioties
I really enjoyed it boss...But I have a doubt....Why debt ,equity are calculated in market value???Will u explain me the logic please??
What happens to the WACC, when in an effort to raise more capital a company takes on additional debt while mainting it's existing debt but at a different coupon rate? Do you calculate the WACC using the different weighted averages of each debt or calculate the weighted average of the combined debt using a weighted/average coupon rate?
very well explained!!! thank you :)
Fantastic!!!!!
Does the Cost of Equity/ Cost of preference equity sometimes include tax? If yes, do we also have to use the after tax rate too?
No it doesn't :) its not tax deductible.....only the cost of debt is (i.e. interest expense on the income statement)
Great explanation
What is the difference between coupun payment and yield to maturity
Great! Thank you!
I'v been looking for that .. thanks
Thank you sir
Welcome
Wow thank you 🙏
Thnks ..its very helpful in my studies
very helpful information
you are a star...
Thank you so much :)
And I also have another doubt also....Why (1-T)?
Thanks a lot... god bless.
Thank you so much
I have doubt on dividend decision can you please clear it for me
THANK YOU!!!!!
that was really good
So helpful
Do you provide any tutoring services?
Thnks man🙏
Thank youuuuuuuuuu.
thank you
why 1-T and not 1+T
Too good
you are fucking amazing
So interesting, look like cristiano btw
Where can I find the stock chapter?
fin300.ca
What is “Preferred Shares”?
Its nothing but preference share capital.
wtf ? bonds ????
Help me... CAPM=WACC ???
Илья Рабенко No CAPM is usually to find the cost of equity using risk free rate etc...
AMAZING AND ATTRACTIVE. LOL
🤗👍
youre a boosssssssss
Thank you so much! Love your step to step explanation. 🙏🏾😎🫶🏾