This is the second of four blog posts to assist ACCA FM students sitting their March exam next Friday.
Business Finance has to be tested in every exam. Candidates would expect to see one of the two constructive response questions to be on this topic.
The typical question includes the calculation of the company WACC consisting of several components. My approach is keep it simple.
1) Compute the Market Values ( Ve, Vp & Vd).
2) Find the each cost of finance (Ke, Kp, Kd(1-t)).
3) Then find the WACC.
Make sure you know the three main conditions that must exist to allow you to use the WACC as a project cost of capital