The weighted average cost of capital represents the return required by the average investor in the...

Question

Question

The weighted average cost of capital represents the return required by the average investor in the firm. True or False?

Answer 1

Answer #1

True

Explanation: Any investor investing in a firm would atleast require a return equal to the WACC inorder to justify the risk taken by the investor.

Answer 2

Similar Homework Help Questions

The weighted average cost of capital represents the return required by the average investor in the...

The weighted average cost of capital represents the return required by the average investor in the firm. T or F
The weighted average cost of capital (WACC) Group of answer choices is the expected return on...

The weighted average cost of capital (WACC) Group of answer choices is the expected return on the overall market portfolio. is the maximum return an investor can expect to earn on a portfolio of its risky projects. is the minimum return a firm must earn on its investments in order to pay each source of financing its required rate of return. all of the above are true.
The weighted average cost of capital represents the annual before−tax percentage cost of the debt. true/false...

The weighted average cost of capital represents the annual before−tax percentage cost of the debt. true/false ?

QUESTION 6 If a firm has a weighted-average cost of capital (WACC) of 6.508%, a required...

QUESTION 6 If a firm has a weighted-average cost of capital (WACC) of 6.508%, a required return on debt of 2.652% and a required return on equity of 12,358%, what proportion of the firm's capital structure is equity if the firm pays 29% in taxes? Assume no preferred stock. Enter your answer as a decimal, e.. 0.3456 for 34.56%, not 34.56.
The weighted average cost of capital for a firm is dependent upon the firm's level of...

The weighted average cost of capital for a firm is dependent upon the firm's level of risk. TRUE OR FALSE It is generally better to base estimates of the WACC on book value weights of debt and equity since market values, particularly those for equity, tend to fluctuate widely. TRUE OR FALSE Ignoring taxes, if a firm issues debt at par, then the YTM cannot be computed. TRUE OR FALSE
Weighted average cost of capital is the result of multiplying the cost of each item in...

Weighted average cost of capital is the result of multiplying the cost of each item in the capital structure by its corresponding representation in the overall capital structure and summing the results. True or False True False False

The proportions of debt and equity used to determine the weighted average cost of capital for...

The proportions of debt and equity used to determine the weighted average cost of capital for a firm is based on the market value of debt and equity outstanding. True False Question 38 (0.2 points) Saved Distinguishing between fixed and variable costs will enable one to calculate the sensitivity of EBITDA to changes in revenue. True False
true or false: under modigliani-miller , the value of the firm is independent of its capital structures, but the weighted average cost of capital still depends on the capital structures.

true or false: under modigliani-miller , the value of the firm is independent of its capital structures, but the weighted average cost of capital still depends on the capital structures.
What is a firm's weighted-average cost of capital for a firm that is financed 45% by...

What is a firm's weighted-average cost of capital for a firm that is financed 45% by debt? The debt has a 10% required return and the equity has a 17% required return. The tax rate is 21%.

6. 6: The Cost of Capital: Weighted Average Cost of Capital The Cost of Capital: Weighted...

6. 6: The Cost of Capital: Weighted Average Cost of Capital The Cost of Capital: Weighted Average Cost of Capital The firm's target capital structure is the mix of debt, preferred stock, and common equity the firm plans to raise funds for its future projects. The target proportions of debt, preferred stock, and common equity, along with the cost of these components, are used to calculate the firm's weighted average cost of capital (WACC). If the firm will not have...