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What impact does WACC have on capital budgeting and structure?

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โˆ™ 2008-07-07 22:43:56
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Q: What impact does WACC have on capital budgeting and structure?
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Related questions

When is WACC an appropriate discount rate when doing capital budgeting?

WACC is appropriate where company is using differnt kind of capital like debt and equity for doing capital budgeting.


What is the objectives of capital structure?

The objective of capital structure is minimize the WACC cost.


Why is WACC a more appropriate discount rate when doing capital budgeting?

Because it lets the firm know what return it must get on its capital to maintain the value of the company.


How is WACC used in capital budgeting analysis when utilizing the IRR method?

See the following Wiki topic: http://en.wikipedia.org/wiki/Capital_budgeting


What is the optimal capital structure?

optimal capital stucture is that where the firm value is high and the wacc of the firm is low and that capital structure a firm can follow constantly and that capital stucture not become a burdon on firm.


What is after tax wacc?

WACC stands for weighted average cost of capital. So after tax means cost of capital after taxes are taken into account.


What is after-tax wacc?

WACC stands for weighted average cost of capital. So after tax means cost of capital after taxes are taken into account.


How do you calculate WACC?

how to calculate WACC how to calculate WACC how to calculate WACC how to calculate WACC


What is the advantage of WACC?

All else equal, the weighted average cost of capital (WACC) of a firm increases as the beta and rate of return on equity increases, as an increase in WACC notes a decrease in valuation and a higher risk.


What does wacc measure?

WACC is a component used in finance to measure the company's cost of capital, usually as a discounting factor and the companies use debt or equity for financing.


What is the difference between WACC and cost of capital?

Cost of capital is that amount which is incurred by business to acquire cost for working capital or business while WACC(Weighted average cost of capital) is that cost which is calculated if there is more than one type of capital is involved by business to arrange finances for business.


What portion of the WACC calculation is impacted by taxes?

The cost of debt is affected by taxes. The debt portion of the WACC is calculated as (total debt / total invested capital)*expected return on debt*(1 - tax rate). More info: http://en.wikipedia.org/wiki/WACC

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