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