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Cost of Capital

I need help answering the following questions regarding the attached WACC calculations:

1. What does calculating the weighted average cost of capital tell you about Foust Company's financial strategy including the level of risk involved in the business?

2. How could the company use WACC calculations in determining future investments?

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What does calculating the weighted average cost of capital tell you about Foust Company's financial strategy including the level of risk involved in the business?

Its the debt equity proportion is .40:.60 it means its 2:3. Hence its conservatively financed as the level of debt is low. THus its financial risk is low.

2. How ...

Solution Summary

This explains the step of computing Cost of capital elucidated by practical case.

$2.19