Explore BrainMass
Share

WACC Concept and Discussion

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

a. What is Weighted Average Cost of Capital (WACC)? Identify TWO (2) factors that affect
the WACC of a company.

1- Using debt can help reduce the agency problem that may arise between the
management of a company and its shareholders. Explain.

2- Explain the effects of the following on the company's weighted average cost of capital:
i) Floatation cost
ii) Reduction in corporate tax

© BrainMass Inc. brainmass.com March 22, 2019, 2:46 am ad1c9bdddf
https://brainmass.com/business/weighted-average-cost-of-capital/wacc-concept-and-discussion-588428

Attachments

Solution Summary

This solution includes a general discussion on WACC (Weighted Average Cost of Capital) and some of the factors that affect the WACC of a company, such as cost of debt, cost of common equity, flotation, corporate tax, and agency conflict. Attached in Word.

$2.19