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TELUS WACC Calculation Overview

The document calculates the weighted average cost of capital (WACC) for TELUS using market values and costs of different sources of finance. It shows the market values, costs, and weights used to calculate a 6.61% WACC. An alternate calculation is shown using class weights and yields a 5.98% WACC. A final calculation uses the capital asset pricing model for the cost of equity and results in a 6.68% WACC.

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Humphrey Osaigbe
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100 views2 pages

TELUS WACC Calculation Overview

The document calculates the weighted average cost of capital (WACC) for TELUS using market values and costs of different sources of finance. It shows the market values, costs, and weights used to calculate a 6.61% WACC. An alternate calculation is shown using class weights and yields a 5.98% WACC. A final calculation uses the capital asset pricing model for the cost of equity and results in a 6.68% WACC.

Uploaded by

Humphrey Osaigbe
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

TELUS

CALCULATION OF WACC
       
MV ×
Source of Finance Market Values Cost Cost
$ % $

Equity 7,175.00 8.97% 643.60

Preference 59.32 6.1% 3.65

Long Term Debt 3,595.46 4.7% 167.25

Short Term Debt 5,033.00 4.7% 234.12


15,862.7
8 EBIAT = 1048.60

WACC = 6.61%

MV ×
Source of Finance Weight Cost Cost
% % $
Equity 45.23% 8.97% 4.06%
Preference 0.37% 6.15% 0.02%
Long Term Debt 22.67% 4.65% 1.05%
Short Term Debt 31.73% 4.65% 1.48%
100.00% WACC 6.61%

Class Calculation
Source of Finance Market Values Weight (%) Cost MV × Cost
$ % % %

Equity 7,175.00 46.82% 7.47% 3.50%

Preference 70.00 0.46% 6.15% 0.03%

Long Term Debt 3,047.00 19.88% 4.65% 0.92%

Short Term Debt 5,033.00 32.84% 4.65% 1.53%


15,325.0
0 WACC 5.98%

1
Class Calculation using CAPM for Cost of Equity
Book/Market
Source of Finance Values Weight (%) Cost MV × Cost
$ % % %

Equity 7,175 46.82% 8.97% 4.20%

Preference 70.00 0.46% 6.15% 0.03%

Long Term Debt 3,047.00 19.88% 4.65% 0.92%

Short Term Debt 5,033.00 32.84% 4.65% 1.53%


15,325.0
0 WACC 6.68%

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