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Unformatted text preview: Weighted Average Cost of Capital WACC = w D *r D (1 T) + w P *r P + w CE *r CE for common equity, the firm uses all retained earnings first since r S < r e actual WACC (WACC*) is the overall hurdle rate, i.e. the minimum required rate of return use the existing WACC for the discount rate for calculating present values for overall, general corporate decisions for individual projects and decisions, need to account for risk and calculate the project-specific cost of equity and WACC...
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This note was uploaded on 07/14/2010 for the course UGBA 18195 taught by Professor Johngonzales during the Summer '10 term at University of California, Berkeley.
- Summer '10