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Please help, I am preparing for my exam, 1.What is the formula for  WACC? Dividens are the...

Please help, I am preparing for my exam,

1.What is the formula for  WACC?

Dividens are the withdrawals made by the directors or shareholders, what is the dividend policy?

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Answer #1

Formula for WACC =Weight of Equity*Cost Of Equity+Weight of Debt*Cost Of Debt*(1-Tax Rate)
Where Weight of Equity =Equity Value/Total Asset
Cost of equity can calculated by the formula =Risk Free Rate+Beta*Market Risk Premium
Weight of Debt =Debt/Total Assets

Following Dividend policy can be followed by directors
1. They may pay regular dividend with no growth.
2. They may not provide any dividends with the returns to investors only coming from capital appreciation.
3. They might follow a policy of providing dividend with constant growth.
4. They might follow a dividend policy of intermittent dividends .

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