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    Weighted Average Cost of Capital

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    Determine the Weighted Average Cost of Capital - Please explain me this in detail.

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    Weighted Average Cost of Capital is the return a firm must earn on existing assets to keep its stock price constant and satisfy its creditors and owners.

    Corporations raise money from two main sources:
    - Equity and
    - Debt.

    Therefore the capital structure of a firm comprises three main components:
    - Preferred equity,
    - Common equity and
    - Debt (typically bonds and notes).

    The WACC takes into account the relative weights of each component of the ...

    Solution Summary

    Weighted Average Cost of Capital is explained.