The WACC formula Ra=(D/V)Rd + (E/V)Re Ra=weighted average cost of capital of company can be rearranged into Re = Ra + (Ra-Rd)(D/E) Can someone please explain how to get to the second formula from the first. Thanks!
(e/v).re = ra - (d/v).rd multiply by v/e re = (v/e) ra - (d/e).rd v = d + e so v/e . ra = d/e.ra + ra so re = ra + (ra - rd) . d/e