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IBM

An example of the calculation of the weighted-average cost of capital

Cost of Equity Amount of Equity


Riskfree rate 4.40% Shares
Beta 1.09 Price
Market return 12% Value
Cost of Equity 12.68%

Cost of Debt Amount of Debt


Rate 5.36% Book value
Taxrate 36% Adjustment
Cost of Debt 3.43% Value

Total Capital

WACC 9.59%
0.943
130
122.59

61.7
1
61.7

184.29

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