FIN 370 Week 4 DQ 1

What is meant by Weighted Average Cost of Capital (WACC)? What are the components of WACC? Why is WACC a more appropriate discount rate when doing capital budgeting? What is the impact on WACC when an organization needs to raise long term capital?


Response
The WACC is a calculation of the firm's cost of capital, and can be thought of as the minimum return on assets to satisfy investors and creditors.
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