The weighted average cost of capital (WACC) reflects the expected average future cost of capital over the long run.

Question

Quizplus · Accepted Answer

The definition of WACC is the weighted average of the cost of equity and the cost of debt, taking into account the proportion of each source of financing within a company's capital structure. WACC is a forward-looking concept that considers both the current and expected future costs of capital, taking into account factors such as market conditions, interest rates, and a company's financial structure. Therefore, it reflects the expected average future cost of capital over the long run.

The Weighted Average Cost of Capital (WACC) Reflects the Expected