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

I have the same solution. Trend of WACC with increasing D/E ratio =        decreasing.

This means that as we increase the D/E ratio, WACC decreases as we see when we increase the ratio from 0.5 to 2,WACC decreases from 9.42 to 7.56. This happens due to tax advantage of increasing the amount of debt .

On Mon, May 30, 2011 at 8:22 AM, mc100205817 Sadia Saeed <mc100205817@vu.edu.pk> wrote:

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......

--

 ●●Gяєу_Fєяяy ●●
vuAskarian_∂oll

--
We say, "Be one as Pakistani Nation and grow up for Pakistan's Future". Wish you all the best. Join www.vuaskari.com,
To post to this group, send email to vuaskari_com@googlegroups.com
Visit these groups:
This (Main) Group:http://groups.google.com/group/vuaskari_com?hl=en?hl=en
MIT/MCS Group: http://groups.google.com/group/vu_askarimit?hl=en?hl=en
HRM Group: http://groups.google.com/group/askari_hrm?hl=en?hl=en
Banking Group: http://groups.google.com/group/askari_banking?hl=en?hl=en
Management: https://groups.google.com/group/vuaskari_mgt?hl=en
Marketing: https://groups.google.com/group/vuaskari_mkt?hl=en
MIS Group: http://groups.google.com/group/askari_mis?hl=en

--
We say, "Be one as Pakistani Nation and grow up for Pakistan's Future". Wish you all the best. Join www.vuaskari.com,
To post to this group, send email to vuaskari_com@googlegroups.com
Visit these groups:
This (Main) Group:http://groups.google.com/group/vuaskari_com?hl=en?hl=en
MIT/MCS Group: http://groups.google.com/group/vu_askarimit?hl=en?hl=en
HRM Group: http://groups.google.com/group/askari_hrm?hl=en?hl=en
Banking Group: http://groups.google.com/group/askari_banking?hl=en?hl=en
Management: https://groups.google.com/group/vuaskari_mgt?hl=en
Marketing: https://groups.google.com/group/vuaskari_mkt?hl=en
MIS Group: http://groups.google.com/group/askari_mis?hl=en

--
We say, "Be one as Pakistani Nation and grow up for Pakistan's Future". Wish you all the best. Join www.vuaskari.com,
To post to this group, send email to vuaskari_com@googlegroups.com
Visit these groups:
This (Main) Group:http://groups.google.com/group/vuaskari_com?hl=en?hl=en
MIT/MCS Group: http://groups.google.com/group/vu_askarimit?hl=en?hl=en
HRM Group: http://groups.google.com/group/askari_hrm?hl=en?hl=en
Banking Group: http://groups.google.com/group/askari_banking?hl=en?hl=en
Management: https://groups.google.com/group/vuaskari_mgt?hl=en
Marketing: https://groups.google.com/group/vuaskari_mkt?hl=en
MIS Group: http://groups.google.com/group/askari_mis?hl=en

--
We say, "Be one as Pakistani Nation and grow up for Pakistan's Future". Wish you all the best. Join www.vuaskari.com,
To post to this group, send email to vuaskari_com@googlegroups.com
Visit these groups:
This (Main) Group:http://groups.google.com/group/vuaskari_com?hl=en?hl=en
MIT/MCS Group: http://groups.google.com/group/vu_askarimit?hl=en?hl=en
HRM Group: http://groups.google.com/group/askari_hrm?hl=en?hl=en
Banking Group: http://groups.google.com/group/askari_banking?hl=en?hl=en
Management: https://groups.google.com/group/vuaskari_mgt?hl=en
Marketing: https://groups.google.com/group/vuaskari_mkt?hl=en
MIS Group: http://groups.google.com/group/askari_mis?hl=en