Beruflich Dokumente
Kultur Dokumente
Assignment No:2
Business lenders
Family and friends
Venture capital firms
Lease
3. What is WACC?
Weighted average cost of capital WACC is the arithmetic average
(mean) capital cost, where the contribution of each capital source is
weighted by the proportion of total funding it provides. WACC is usually
expressed as an annual percentage.
4. How cost of capital can be calculated?
Once cost of debt and cost of equity have been determined, their
blend, the weighted average cost of capital (WACC), can be calculated.
This WACC can then be used as a discount rate for a project's projected
cash flows.
5. What is the usage of cost of capital?
From a company's point of view, the cost of capital refers to the cost of
obtaining fundsdebt or equityto finance an investment. The cost of
capital is used to evaluate new projects of a company, as it is the
minimum return that investors expect for providing capital to the
company.