It is appropriate that the WACC reflect historic costs of capital as the best estimate of what capital will cost during the coming period.

Question

Quizplus · Accepted Answer

The WACC should reflect the current cost of capital, not historic costs, in order to provide the best estimate of what capital will cost during the coming period. Historical costs may not accurately reflect current market conditions and interest rates.

It Is Appropriate That the WACC Reflect Historic Costs of Capital