Capital Structure Flashcards by Jamie Cairns | Brainscape

Q

WACC = R0

R0 = ?

A

Cost of capital for an all equity firm

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Q

Re = ??

Cost of equity

A

W/out taxes
R0 + D/E (R0 - Rd)

W/ taxes
R0 + D/E (R0 - Rd)(1 - Tc)

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Q

Vu = ??

A

EBIT(1 - Tc) / R0

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Q

Vl = ??

A

(EBIT(1 - Tc) / R0) + (D x Tc)

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