Select all options that describe the Weighted Average Cost of Capital (WACC) for a company a The WACC is an average of the cost of debt and equity capital in the company The costs of debt and equity are scaled depending on the proportion of each type of funding in the company b The WACC is a measure of the profitability of the company It represents the amount of surplus capital the company generates after it has paid interest and debt repayments c The WACC for the company is equal to the cost of equity plus the cost of debt This total cost of capital reflects the price of a single share in the company d The WACC represents the overall cost of the company's long term financing It also represents the required return on the company's assets e The WACC for the company is equal to the cost of equity plus the cost of debt Interest on debt must always be paid so the cost of debt must always be more than the WACC

Question

Select all options that describe the Weighted Average Cost of Capital (WACC) for a company  a  The WACC is an average of the cost of debt and equity capital in the company  The costs of debt and equity are scaled depending on the proportion of each type of funding in the company  b  The WACC is a measure of the profitability of the company  It represents the amount of surplus capital the company generates after it has paid interest and debt repayments  c  The WACC for the company is equal to the cost of equity plus the cost of debt  This total cost of capital reflects the price of a single share in the company  d  The WACC represents the overall cost of the company's long term financing  It also represents the required return on the company's assets  e  The WACC for the company is equal to the cost of equity plus the cost of debt  Interest on debt must always be paid so the cost of debt must always be more than the WACC

Accepted Answer

The Answer is in the image, click to view ...

	a. The WACC is an average of the cost of debt and equity capital in the company. The costs of debt and equity are scaled depending on the proportion of each type of funding in the company.
	b. The WACC is a measure of the profitability of the company. It represents the amount of surplus capital the company generates after it has paid interest and debt repayments.
	c. The WACC for the company is equal to the cost of equity plus the cost of debt. This total cost of capital reflects the price of a single share in the company.
	d. The WACC represents the overall cost of the company's long term financing. It also represents the required return on the company's assets.
	e. The WACC for the company is equal to the cost of equity plus the cost of debt. Interest on debt must always be paid so the cost of debt must always be more than the WACC.

Question

Select all options that describe the Weighted Average Cost of Capital (WACC) for a company: a. The WACC is an average of the cost of

Step by Step Solution

Step: 1

Get Instant Access to Expert-Tailored Solutions

Step: 2

Step: 3

Ace Your Homework with AI

Recommended Textbook for

Principles Of Public Finance

Students also viewed these Finance questions

Question

Question

Question

Question

Question

Question

Question

Question

Question

Question

Question

Question

Question

Question