Capital structure is the mix of long term borrowing, short term borrowing, common equity and preferred equity that a company uses to finance its operations and its growth. This means that a company’s capitals structure is the combination of common equity, preferred equity and borrowing that has been employed to finance the assets, growth and operations of the company.
The weighted average cost of capital is calculated using the following formulae
WACC = E/V*Re + D/V*Rd*(1-Tc)
Where: Re is the cost of equity, Rd is the cost of debt, E = market value of the firm’s equity, D = market value of the firm’s debt, V = E + D, E/V = percentage of