The WACC is used to _______ the expected cash flows when the firm has ___________.
A) discount; debt and equity in the capital structure.
B) capitalize; short term financing on the balance sheet.
C) increase; debt and equity in the capital structure.
D) decrease; short term financing on the balance sheet.

Question

Quizplus · Accepted Answer

The Weighted Average Cost of Capital (WACC) is used to discount expected cash flows when the firm has both debt and equity in its capital structure. It reflects the average rate of return a company is expected to pay its security holders to finance its assets.

The WACC Is Used to _______ the Expected Cash Flows