Weighted Average Cost of Capital
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The weighted average cost of capital (WACC) reflects, on the average, the firm's cost of long-term financing. Given the costs of the specific sources of financing, how would you obtain the appropriate weights for use in calculating a firm's WACC?
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This explains the concept of Weighted Average Cost of Capital
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The weighted average cost of capital (WACC) reflects, on the average, the firm's cost of long-term financing. Given the costs of the specific sources of financing, how would you obtain the appropriate weights for use in calculating a firm's WACC?
Appropriate weights for use in firm's WACC :
There can be two choices:
1. Book value of the source of financing
It is based on the value of the capital recorded in the balance ...
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