respond to: The weight average cost of capital $($WACC$)$ is the after tax cost of the different capital sources a company uses $($Folger$,2022).$ These various sources weighed into WACC are long$-$term debt, short$-$term debt, preferred stock, and common stock $($Brigham & Ehrhardt, $2020).$ When the Federal Reserve Bank $($Fed$)$ raises interest rates this raises the risk free rate, this is the theoretical rate of return that has no risks $($Folger$,2022).$ When that rate increases the interest rate the a company uses to calculate their WACC would also increase $($Folger$,2022).$ Common mistakes that are made when estimating the WACC according to are textbook are as follows. Using the cost of debt on the coupon rate on a firm's existing debt as a base for WACC $($Brigham & Ehrhardt, $2020).$ This mistake occurs when the coupon rate is used instead of interest rate the firm would pay today $($Brigham & Ehrhardt, $2020).$ Using the historical average return on stocks along side the current return on T$-$bonds when estimating the market risk premium for the CAPM method $($Brigham & Ehrhardt, $2020).$ Companies need to make sure they are using the historical market risk premium $($Brigham & Ehrhardt, $2020).$ When estimating WACC using the current book value capital structure as the way to obtain weights $($Brigham & Ehrhardt, $2020).$ The best choice should be the company's target capital structure for weights $($Brigham & Ehrhardt, $2020).$ Finally, Capital components are funds that come from investors $($Brigham & Ehrhardt, $2020).$ This means that its not a capital component if its not from an investor and that should always be remembered $($Brigham & Ehrhardt, $2020).$