Question

What is Votoan’s weighted average cost of capital?

Answer 1

Answer : Weighted average cost of capital is cost of capital that management has to pay to all of its security holder (who finances the assets of company). WACC can also be called as firms cost of capital. It is calculated by calculating cost of each instrument and then average it by the weight of such instrument. It is driven by outside market and not management. Management only calculate it. There can be saving of tax in debt instrument, for which after tax are taken into consideration.