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  • Accor Q2

    Încărcat de

    Dahagam Saumith
    11 vizualizări2 pagini
    This document calculates the weighted average cost of capital (WACC) for EnCana using the standard WACC formula. It provides the calculations for the five inputs needed: total debt of $8054, total equity of $16007, tax rate of 30.81%, cost of debt of 6.5%, and cost of equity of 16.519%. Plugging these values into the WACC formula results in a WACC of 12.4936% for EnCana.

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    Accor_Q2

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    This document calculates the weighted average cost of capital (WACC) for EnCana using the standard WACC formula. It provides the calculations for the five inputs needed: total debt of $8054, total equity of $16007, tax rate of 30.81%, cost of debt of 6.5%, and cost of equity of 16.519%. Plugging these values into the WACC formula results in a WACC of 12.4936% for EnCana.

    Drepturi de autor:

    © All Rights Reserved
    Descărcați ca DOCX, PDF, TXT sau citiți online pe Scribd
    Indicator pentru conținut neadecvat
    11 vizualizări2 pagini

    Accor Q2

    Încărcat de

    Dahagam Saumith
    This document calculates the weighted average cost of capital (WACC) for EnCana using the standard WACC formula. It provides the calculations for the five inputs needed: total debt of $8054, total equity of $16007, tax rate of 30.81%, cost of debt of 6.5%, and cost of equity of 16.519%. Plugging these values into the WACC formula results in a WACC of 12.4936% for EnCana.

    Drepturi de autor:

    © All Rights Reserved
    Descărcați ca DOCX, PDF, TXT sau citiți online pe Scribd
    Indicator pentru conținut neadecvat
    din 2

    We need to calculate cost of capital (WACC) for the company EnCana.

    The formula for weighted


    average cost of capital is given below.
    𝐸 𝐷
    𝑊𝐴𝐶𝐶 = 𝐾𝑒 ( ) + 𝐾𝑑 ( )(1 − 𝑡)
    𝐷+𝐸 𝐷+𝐸
    To calculate cost of capital we need five unknowns mentioned in above formula

    1. Total Debt = D
    2. Total Equity = E
    3. Tax Rate = t
    4. Cost of Debt = 𝐾𝑑
    5. Cost of Equity = 𝐾𝑒

    Calculations:
    1. Total Debt (D) = 5278 + 1278 + 1425 + 73

    = 8054

    2. Total Equity (E) = 5264 + 10743


    = 16007

    𝐷 8054
    = = 0.3347
    𝐷+𝐸 8054 + 16007

    𝐸 16007
    = = 0.6652
    𝐷+𝐸 8054 + 16007

    1260
    3. Tax Rate (t) =
    4089

    = 0.3081

    𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒
    4. Cost of Debt (𝐾𝑑 ) =
    𝑇𝑜𝑡𝑎𝑙 𝐷𝑒𝑏𝑡
    524
    =
    8054
    = 6.5%

    5. Cost of Equity (𝐾𝑒 ) = 𝑅𝑓 + 𝛽 (𝑅𝑚 − 𝑅𝑓 )

    𝑅𝑓 = Long term government bond rate = 4.2%


    Β = 1.27
    𝑅𝑚 = Arthmatic Average Market return = 13.9%

    𝐾𝑒 = 4.2 + 1.27 (13.9 − 4.2)

    = 16.519%
    𝐸 𝐷
    𝑊𝐴𝐶𝐶 = 𝐾𝑒 ( ) + 𝐾𝑑 ( )(1 − 𝑡)
    𝐷+𝐸 𝐷+𝐸
    𝑊𝐴𝐶𝐶 = 16.519 (0.6652) + 6.5 (0.3347)(1 − 0.3081)

    𝑊𝐴𝐶𝐶 = 10.9884 + 1.5052


    𝑊𝐴𝐶𝐶 = 12.4936%

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