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What is the WACC?

  1. A The cost of equity only
  2. B The weighted average cost of all sources of capital, debt and equity
  3. C The interest rate on the company's largest loan
  4. D The average return on the company's assets
Answer

The weighted average cost of all sources of capital, debt and equity

WACC weights the after-tax cost of debt and the cost of equity by their proportions in the capital structure. It is the standard discount rate for project appraisal.

All Finance MCQs

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