Re: ::: vuaskari.com ::: FIN622 GDB IDEA SOLUTION BY ASHAR ALI AND RECHEKED TOO

http://en.wikipedia.org/wiki/Modigliani%E2%80%93Miller_theorem
in this link increasing in debt to equity WACC will remain constant.. plz guide me..

On Mon, May 30, 2011 at 9:11 AM, mc100205817 Sadia Saeed <mc100205817@vu.edu.pk> wrote:

Increase in Debt or Debt-equity Ratio decreases the WACC

Binish: plz give the reference of this.. this increasing or decreasing is much confusing.

On Sun, May 29, 2011 at 8:41 PM, mc100201622 Fizza Jabeen <mc100201622@vu.edu.pk> wrote:

can u tel me ya highlight valuse kasy ai?

WACC if the Debt-equity Ratio of Company is .5 WACC=.11(1/1.5) + .09(.5/1.5)(1-.35) WACC=.11(.666666666) + .09(.333333333)(.65) WACC=.073333333 + .03(.65) WACC=.073333333 + .0195 WACC=.092833333 WACC=9.28% WACC if the Debt-equity Ratio of Company is 1.0 WACC=.11(1/2) + .09(1/2)(1-.35) WACC=.11(.5) + .09(.5) (.65) WACC=.055 + ..045(.65) WACC=.055+.02925 WACC=.08425 WACC=8.42% WACC if the Debt-Equity Ratio of Company is 2.0 WACC=.11(1/3) + .09(2/3)(1-.35) WACC=.11(.333333333) + .09(.666666666)(.65) WACC=.036666666 + .06(.65) WACC=.036666666 + .039 WACC=.075666666 WACC=7.56% Trend of WACC With increasing D/E Ratio Increase in Debt or Debt-equity Ratio decreases the WACC agar thek hai then tell me aur agar wrong hai then also tell me i m waitng ur reply  this soulation is 100% correct i check it my self......

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