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Why is it important to estimate a firm’s WACC? What is it used for? What should management...

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Finance

Why is it important to estimate a firm’s WACC? What is it usedfor?

What should management do if none of the available projects earnan adequate WACC?

Why do we use an after-tax figure for the cost of debt but notfor the cost of equity?

Should the company you evaluated use the WACC as the hurdle ratefor all projects? Explain.

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The weighted average cost of capital is an important parameter in finance because it indicates the cost of Financing A business wants to earn high profits and so it needs to know its cost in order to determine whether its revenues    See Answer
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Why is it important to estimate a firm’s WACC? What is it usedfor?What should management do if none of the available projects earnan adequate WACC?Why do we use an after-tax figure for the cost of debt but notfor the cost of equity?Should the company you evaluated use the WACC as the hurdle ratefor all projects? Explain.

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