2. The weighted average cost of capital Aa Aa A company that has both debt and equity in its capital structure uses the weighted average cost of capital (WACC) as its discount rate. Based on your understanding of the WACC, complete the following statements. In general, the the company's WACC the risk of a company as perceived by its existing and potential investors, the greater is The calculation of a company's WACC should be based on the after-tax cost of the dollar of financial capital raised It is generally held that the proportions, or weights, used in the calculation of a company's WACC should be based on the market values of the company's capital sources. This is because the market value weighting system is more consistent with maximising the value of the company's True or False: A company's weighted average cost of capital (WACC) reflects the composite cost of its debt preference shares, and shareholder's equity. O True False True or False: Because most companies tend to raise funds in large, lumpy amounts, their WACCS should reflect the individual, after-tax cost of the particular source of funds used to finance an investment project. O False True