Particulars

Operating Income
Less: Interest on Debt
Equity Earnings
Cost of Equity
Cost of Debt

Market Value of Equity

Equity Earnings/Cost of Equity (rE)

Market Value of Debt

WACC of a Firm

WACC (rA)of Firm A

WACC (rA) of Firm B

 Firm A Firm B

rA = rD*[ D/D+E] + rE* [E/D+E]

NOI = 30 Rs mn
Debt = 100 Rs mn
Interest (rD) = 10%

rE = 15%

M.V. of Equity = Equity Earnings/rE

Equity Earnings Rs in Mn
NOI
Interest on Debt
Equity Earnings

M.V. of Equity Rs Mn

M.V. of Firm Mahima = Rs Mn