How are the component costs combined to form a weighted average cost of capital (WACC), and why

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How are the component costs combined to form a weighted average cost of capital (WACC), and why is it necessary to use the WACC in capital budgeting?

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...
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