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What is the impact on WACC when an organization needs to raise long term capital?
Wiki User
∙ 14y ago
Long term capital requires organizations to review risk-free rates of maturity. Long term leaves chance for rates to change, so the organization has to make sure they can assume the associated risk, meet the changing required rate of return, and meet the changing rates which affect associated costs or fees. Looking at the larger scope of a long term project can weight the decision due to the potential risks involved in the extended time frame. Since WACC provides a more appropriate discount rate, it provides a more accurate picture of what financial obligations must be met, and help determine which long term and short term options make most sense for that organization.
Wiki User
∙ 14y ago
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its corprorations
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