Briefly identify and describe some important uses of a firm's weighted average cost of capital

What will be an ideal response?


Answer: The WACC is used to establish the value of a firm. If a private equity firm wanted to purchase BJ's Wholesale Club, it would discount BJ's expected cash flows by its estimated cost of capital. The WACC is the starting point for determining the required rate of return on capital expenditures. The WACC is also used in evaluating a firm's performance and determining whether or not it is creating value for its shareholders.

Business

You might also like to view...

In corporate accounting, a distinction is made between paid-in or invested capital and capital resulting from retained earnings

a. True b. False Indicate whether the statement is true or false

Business

Stealth Software Inc Stealth Software Inc has the following information available from last year for one of its software products: Sales revenue $50,000 Variable costs 15,000 Fixed costs 10,000 Net operating income $25,000 Refer to the Stealth Software Inc information above. If the software had a sales price of $20 per unit, what is the contribution margin per unit?

A) $10 B) $6 C) $14 D) $20

Business

Content marketing is extremely important for businesses that want to deliver valuable content for their customers. Provide arguments to justify this statement

What will be an ideal response?

Business

What are the components and capabilities of a geographical information system?

What will be an ideal response?

Business