weighted average cost of capital

The weighted average cost of capital is an approach to determining a discount rate.

The structure of capital should be decided considering the weighted average cost of capital.

The current overall return, or weighted average cost of capital, is equal to the discount rate used in the evaluation of the firm's projects.

If the intent is simply to determine whether a project will add value to the company, using the firm's weighted average cost of capital may be appropriate.

This is usually carried out by estimating a weighted average cost of capital for the cash-flow stream of the firm as a whole.

Generally for comparing projects more fairly, the weighted average cost of capital should be used for reinvesting the interim cash flows.

In the contract, the rate of return was called "weighted average cost of capital" or "market-based appropriate discount rate".

The formula is derived from the theory of weighted average cost of capital (WACC).

Current industry trading trends are mixed, group returns are below [weighted average cost of capital] and we forecast no earnings growth over the next three years."

Weighted average cost of capital ("WACC")

The discount rate used is generally the appropriate Weighted average cost of capital (WACC), that reflects the risk of the cashflows.

When analyzing projects in a capital constrained environment, it may be appropriate to use the reinvestment rate rather than the firm's weighted average cost of capital as the discount factor.

Moreover, a firm's overall cost of capital, which consists of the two types of capital costs, can be estimated using the weighted average cost of capital model.

The Weighted Average Cost of Capital (WACC) is used in finance to measure a firm's cost of capital.

The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets.

In theory, the WARA should generate the same cost of capital as the Weighted average cost of capital, or WACC.

The concept was originally added to the methodology proposed by Franco Modigliani and Merton Miller for the calculation of the weighted average cost of capital of a corporation.

A firm's weighted average cost of capital (after tax) is often used, but many people believe that it is appropriate to use higher discount rates to adjust for risk, opportunity cost, or other factors.

Whilst the time value of money can be rectified by applying a weighted average cost of capital discount, it is generally agreed that this tool for investment decisions should not be used in isolation.

The research found, for example, that of the firms surveyed, 22% incorrectly used the before tax rate as the discount rate, while 14% used the weighted average cost of capital as the discount rate.

The weighted average cost of capital for a levered firm is the weighted average of the post-tax costs of equity and debt using the proportions of equity and debt in the balance sheet as weights:.

Real-world EEV usually uses a risk discount rate made up of the risk free rate plus a risk margin which reflects the weighted average cost of capital and Beta from the CAPM model.

Managers use models such as the CAPM or the APT to estimate a discount rate appropriate for a particular project, and use the weighted average cost of capital (WACC) to reflect the financing mix selected.

The required return is an annuity based on the purchase price of the assets in use in the business, inflated to today's value of money, the weighted average cost of capital (WACC) and the economic life of the assets.

The Flow to Equity-Approach is one of three commonly used discounted-cash-flow (DCF) methods of corporate valuation, the other two are Adjusted Present Value and Weighted Average Cost of Capital (WACC).