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What are the advantages and disadvantages of weighted average cost?
The advantages of using weighted average cost is that it is consistent, the formula is very simple to use and their is less paperwork. This method, however, makes it difficult to follow the ups and downs of the market if prices change frequently.
What are the limitations of the weighted average cost of capital?
One limitation of the weighted average cost of capital is that a firm may possibly end up having a negative Net Present value. This occurs if the weighted average cost of capital gives a discount rate that is too low.
What is advantages and disadvantages of weighted average?
The advantages of using weighted averages are that it smooths out fluctuations due to statistical outliers. The disadvantage is that this gives a uniformity in the statistics and can make it difficult to project trends.
Who sets weighted average cost of capital?
It must be the managers
A firm's cost of finaning in an overall sense is equal to its?
Weighted average cost of capital.
What are the advantages of the weighted average method?
The weighted average method is advantageous because it smoothens out fluctuations in inventory costs by incorporating both old and new cost data. It is simple to calculate and less subject to distortions from extreme price changes. This method is also compliant with generally accepted accounting principles (GAAP).
Weighted-average contribution margin?
Weighted average contribution margin is the weighted amount of contribution margin generated by all units of different mix of products to recover the total fixed cost of company.
What is the definition of Weighted average cost?
Weighted average cost includes all types of finances company uses to finance it's business like equity finance, debt finance, loan or debenture etc.
How are the weights determined to arrive at the optimal weighted average cost of capital?
estimates
Why is Weighted Average Cost of Capital important to an organization?
imoportant of capital cost to a hotel imoportant of capital cost to a hotel
Inventory valuation method that tends to smooth out erratic changes in cost?
Weighted Average
What are the advantages of weighted average?
More importance can be attached to observations which are either of greater importance, accuracy (lesser variance).
