Select a company of your choice and research the Cost of Capital for that company (i.e. GE Capital, Wal-Mart, Apple, Google, Yahoo, IBM, Boeing, Target ...etc) and explain the importance of the Cost of Capital.
| The company is Consolidated Edison also known as | |||||||||
| Con Ed. | |||||||||
| The weighted average cost of capital (WACC) for Con Ed is 4.2%. | |||||||||
| The Weighted average cost of capital (WACC) is given by: | |||||||||
| Weighted average cost of capital (WACC) = [(S/S+B)*Rs + (B/S+B)*Rb(1-tc)] | |||||||||
| S = equity, B = debt, Rs = Cost of equity, Rb = cost of debt, | |||||||||
| tc = corporations tax rate | |||||||||
| The WACC or cost of capital is important because a company can compare the companies | |||||||||
| investment projects with the cost of capital. | |||||||||
| In other words, a company can make a profit if the return on investment is more than | |||||||||
| the cost of capital. | |||||||||
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