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Select all options that describe the Weighted Average Cost of Capital (WACC) for a company:

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  • The WACC is a measure of the profitability of the company. It represents the amount of surplus capital the company generates after it has paid interest and debt repayments. Y/N
  • The WACC represents the overall cost of the company’s long term financing. It also represents the required return on the company’s assets.Y/N
  • The WACC is an average of the cost of debt and equity capital in the company. The costs of debt and equity are scaled depending on the proportion of each type of funding in the company.Y/N
  • The WACC for the company is equal to the cost of equity plus the cost of debt. Interest on debt must always be paid so the cost of debt must always be more than the WACC.Y/N

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