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Which of the following components should you NOT consider when estimating the WACC? Group of answer...

Which of the following components should you NOT consider when estimating the WACC?

Group of answer choices

Tax rates

Cost of equity capital

Cost of Debt

Cost of Accounts Payable

Cost of Preferred Stock

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Homework Answers

Answer #1

While calculating WACC, cost of accounts payable should not be taken into account as it is already includes in the debt component.

Cost of account payable is the answer.

Also if i go by the formula

WACC = Wd( Kd(1-t) + Wps(Kps) + Wce(Kce)

Wd = percentage of debt

Wps = percentage of preffered stock

Wce = percentage of common stock

So all the rest of options are included in formula. Hence are incorrect

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Took real efforts

thanks & regards

K = cost of various components

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