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Weighted Average Cost of Capital

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.

$2.19