Description
FIN 515 Week 4 DQ 2
The Cost of Capital
What are possible capital components in the WACC equation?
How does a company with debt, preferred stock, and common stock in its target capital structure calculate its weighted average cost of capital (WACC)?
How is the weighted average cost of capital (WACC) used in a capital investment program to select investments?
Regarding the WACC, what are some factors that the firm can’t control? Please explain.
For a company that has common stock in its capital structure, what’s one way to estimate the cost of common stock in the WACC formula?
Regarding the weighted average cost of capital, what are some factors that the firm can control? Please explain.
Would you expect that a company’s WACC would increase as the firm took on more debt in its capital structure?
Any idea what percentage of U.S. publicly-traded companies have preferred stock in their capital structures?
