A firm has a WACC of 10%, and it wishes to undertake a project that is far more risky than projects previously accepted under the normal course of its business. How should the company evaluate this project? Why?© BrainMass Inc. brainmass.com June 3, 2020, 6:35 pm ad1c9bdddf
The WACC is simply the cost of the several types of capital (called capital components) used by a firm, weighted by their proportions in the firm's capital structure. In order to calculate the WACC, the analyst has to estimate
the cost of debt
the cost of preferred ...
This explains the meaning of Risk adjusted discount rate