Description
1) Please describe the weighted average cost of capital. How do firms use the weighted average cost of capital for decision making?
2) How are the costs of debt and equity calculated?
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Explanation & Answer
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Running head: WEIGHTED AVERAGE COST
Weighted Average Cost
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Institution Name
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WEIGHTED AVERAGE COST
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The Weighted Average Cost
WACC is defined as the rate an organization is to pay, on average, all the security holders to
finance all its assets. The WACC is, therefore, the calculation of the cost of capital across all
sources. The Weighted Average Cost of Capital takes the role of a discount rate for calculating
the net present value of an organization (Corporate Finance Institute, 2020). M...
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