Which formula would you use if you needed to find the value of WACC for three types of finance?

Question

Quizplus · Accepted Answer

The correct formula for calculating the Weighted Average Cost of Capital (WACC) when considering three types of finance (equity, debt, and preferred stock) is: WACC = kEWE + kDATWD + kpWp. This formula accounts for the cost of equity (kE), the cost of debt (kD), and the cost of preferred stock (kp), each weighted by their respective proportions in the total capital structure (WE, WD, Wp).

Which Formula Would You Use If You Needed to Find