Question
Why do we use the overall cost of capital for investment decisions even when only one source of capital will be used (e.g., debt)?Suppose a
Why do we use the overall cost of capital for investment decisions even when only one source of capital will be used (e.g., debt)?Suppose a firm estimates its weighted average cost of capital (WACC) to be 10%.Should the WACC be used to evaluate all of its potential projects, even if they vary in risk? If not, what might be "reasonable" costs of capital for average, high and low-risk projects?
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Financial Management For Decision Makers
Authors: Peter Atrill, Paul Hurley
2nd Canadian Edition
138011605, 978-0138011604
