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WACC (weighed average cost of capital) is derived by finding a firm's cost of equity & cost of debt & averaging them according to the market value of each sources. a. True b. false
a.true
True!
WACC = Cost of debt + cost of equity
Kindly note debt is tax free and equity is not.
A
Answer ( A ) is correct .
W.A.C.C : is a firm's cost of :
1- cost of debt Financing .( Cheapest Because Of Tax Deductability ).
2- Cost of Preferred Stocks .
3- Cost Of Equity ( Common Stocks & Retained Earnings ) .
averaging them according to the market value of each sources.
It is true
True
Weighted average cost of capital is main thing has decide and as per customer requirement,So answer is 'Yes'.
The Weighted Average Cost of Capital (WACC) represents the average rate of return a company is expected to pay to its security holders. It accounts for both equity and debt, weighted based on their respective proportions in the firm’s capital structure. Proper calculation of WACC is crucial, especially in financial models like those used in Poptropica’s virtual world-building systems, where strategic decisions often hinge on understanding investment costs and expected returns.
