WACC and factors influences a company's WACC
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Define WACC and what factors influences a company's WACC?
Should composite WACC be used as a hurdle rate for a company's separate divisions?
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Response defines WACC and factors influences a company's WACC.
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WACC
Define WACC and what factors influences a company's WACC?
WACC (Weighted Average Cost of Capital) is an expression of this cost and is used to see if certain intended investments or strategies or projects or purchases are worthwhile to undertake. (Valuebasedmanagement, 2009)
It is the weighted average cost of all the funds of the organization such as debt and shares. It would consider the following factors:
-Risk appetite of the management
-Future Capital requirements
-Degree of operating leverage
-Economic scenario
-State of business cycle
-Cost of ...
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