Capital Structure

Free CPA BAR (Business Analysis & Reporting) lesson in Business Analysis. 34 min read, ~5,034 words.

WACC is the weighted average of after-tax cost of debt, cost of preferred, and cost of equity, computed at market value weights. After-tax cost of debt equals pre-tax yield times (1 − T); the tax shield applies only to debt, never to preferred dividends. Cost of equity has three accepted...

What this lesson covers

• Content
• Example 1
• Example 2
• Example 3
• Example 4
• Example 5
• Example 6
• Example 7
• Example 8
• Example 9
• Common Mistakes
• Check Your Understanding
• Exam Shortcuts

Learning objectives

• I.B2

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