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WACC = Re/(E+D) + (1-Tc)*Rd/(E+D)
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The previous answer is kind of confusing, so here is my attempt to clarify: WACC = (E/(E+D+P))*Re + (1-Tc)*(D/(E+D+P))*Rd + (P/(E+D+P))*Rp Where E is the market value of the firm's equity (common stock) D is the market value of the firm's debt P is the market value of the firm's preferred stock (if it has any) Tc is the corporate tax rate, because the interest paid on debt is tax-deductable WACC is also an appropriate rate at which to discount the future cash flows of the firm. Less
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Just remember all the definations and little bit of formulas.