Cost of Capital - Week 6

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4 Terms

1
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What is the definition for WACC?

The average rate of return a company must pay its investors weighted by how much of each type of financing it uses.

2
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What does a lower WACC indicate?

  • Cheaper financing

  • Higher company value

3
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What are the components of WACC?

  1. Equity (shares) 

  2. debt (loans,bonds)

  3. Preference shares 

4
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