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This is due Friday. I need a 150-200 word response with references for each
question.
Question 1
In the WACC equation we are using the cost of shareholder equity and the after tax cost of debt to
determine the cost of capital. Why is WACC an excellent measure of the financial performance of a
company?
Question 2
Signaling is a financing action by management that is believed to reflect it's view of the firm's
stock value. What does debt financing signal versus equity financing?
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