FINA 2710 Chapter 13: Weighted Cost of Capital and Company Valuation
11 Feb 2017
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Why cost of capital is important raise money to finance long-term assets. The weighted average is the expected rate of return investors would demand. Chapter 13: weighted cost of capital and company valuation. Cost of capital the weighted average of the capital component costs used to. Capital structure a firm"s mix of debt and equity financing on a portfolio of all the firm"s outstanding securities portfolio of all the firm"s securities, adjusted for tax savings due to interest. Weighted-average cost of capital (wacc) expected rate of return on a. New projects must have an expected return greater than wacc to be. The return earned on assets depends on the risk of those assets. The return to an investor is the same as the cost to the company. Our cost of capital provides us with an indication of how the market views the risk of our assets.
