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The weighted average cost of capital is used to determine whether or not a project should be done.
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- The difference between APV approach, NPV approach and Weighted Average Cost of Capital approach to estimating the value of project.The cost of capital represents a. the capital outlay required in a project. b. the initial investment of a project. c. the IRR of the investment. d. the minimum ROI of the investment.Weighted average cost of capital (WACC) reflects the average cost of all capital components proportional to their use in the overall cost of the project. true or false?
- Relate the idea of cost of capital to the opportunity cost concept. Is the cost of capital the opportunity cost of project money?When computing the Weighted Average Cost of Capital (WACC), what are the primary variables used?. How are the component costs combined to forma weighted average cost of capital (WACC),and why is it necessary to use the WACC in capitalbudgeting?