ACCA I Advanced Financial Management (AFM) I Weighted Average Cost of Capital (WACC) - AFM Lecture 4

[@aiyenigbaoluwakemi3794]

Hi Sabi, thank you for all you do and your AFM course is a real life saver. I came accross your page after failing AFM the first time and I almost lost hope. Your completer videos and the 14days crash course was all I used for studies and I passed the second time. With your help I am now an ACCA affiliate. Thank you again !

[@harshz.solanki]

For those who have doubt regarding 2:1 ratio, it the MV of bonds (not the year as mention in video). 2 year bond MV= 27m 10 year bond MV= 54 (twice 2 year = 2x27) so the ratio is 1:2 Sabi thank you so much for lectures its very helpful ❤

[@mohammadhoque7963]

Lecture is very clear & will helpful for us.

[@kanwar652]

Brilliant work mam

[@yashdym9739]

Hi Sabi. I have a question regarding the ratio 2:1 you used for the weighted average cost of debt calculation. I am not able to understand how you reached 2:1. The number of years is 2:10 which would be 1:5. If we use market value of each debt we would still not reach 2:1. Kindly advise.

[@blackm9063]

Great efforts. thank you Mam

[@oluwadamilareabrahamadenir523]

Thank you so much for this lecture! Well understood, Please I have a reservation as to how you calculated the WACC in Test your understanding 8, @ 2:00:00 , why is the WACC adjusted for tax (multiplying it by 0.7) after the cost of debt have been adjusted for tax before computing the WACC. From my own understanding, when the cost of debt have been adjusted for tax, the WACC should not be adjusted since the cost of debt is already Kd(1-T). Please I would appreciate your timely response on this. Thank you🙏🏽

[@prosecutor17]

I have same question. Did you manage to find an answer?

[@oluwadamilareabrahamadenir523]

@@prosecutor17 yes, the cost of debt should be calculated post tax before calculating the WACC and not the WACC itself.

[@grenadeby]

Her mistake,no need to multiply by 0.7 again.

[@siyafsalim5127]

how should we calculate the modigliani and miller formula in excel ??

[@foodies_club25]

mam your lectures are very helpful. but there is only one advice that please solve test of understandings in a goof handwriting. i am not able to understand sometime your handwriting if i do a revision.

[@vin7281]

Thank you for this, I am grateful

[@shanmuganathanthiripuranat1368]

Thank you

[@Champingcom]

Thanks

[@zayanyan8496]

Hi ma'am I found your Videos very helpful in understanding the concepts. Can you provide a email to contact

[@prosecutor17]

Please anyone, why during the calculation cost of debt, we deduct a tax from cost of debt, and later in wacc deduct the tax again second time on same cost of debt? Looks like double taxation?

[@anishkabra4309]

Thank You