International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

A Case Study of Examining and Analyzing Weighted Average Cost of Capital in Traditional and New Approach for Calculating the Value of Firm
Alireza Eskandari, Farahnaz Orojali Zadeh

In this study we investigate two methods of calculating the firm value base on correct rate of WACC, which are traditional and new approach published by Llano-Ferro (2009). If the WACC rate is wrong calculated, the result affects the firm value. It is essential of using methods to find the firm value without using of WACC rate and with it. The study by Rehman & Raoof (2010) examines Llano-Ferro’s (2009) approach by an example. We try to find the correct method and correct WACC formulation by using the real example in current market and reality examination. We found Rehman & Raoof‘s (2010) formulation is correct for calculating firm value and WACC.

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