--%>

Regarding WACC, determine an opportunity cost on project

Regarding the WACC which has to be applied to a project, must it be an expected return, the average historical return or an opportunity cost on similar projects?

E

Expert

Verified

The WACC is neither an expected return, nor an opportunity cost nor an average historical return. This WACC is a weighted average of required returns.

   Related Questions in Corporate Finance

  • Q : Who published a book regarding

    Who published a book regarding option formula and risk neutrality?

  • Q : Is net income of a year is doubtful for

    Is the net income of a year money the company made that given year or is this a number whose importance is quite doubtful?

  • Q : Is ROE a correct measurement of return

    The ROE is the ratio among net income and Shareholders’ equity. The meaning of Return on Equity is return to shareholders. Therefore, is ROE a correct measurement of the return to shareholders?

  • Q : Problem on implied exchange rate a) The

    a) The Australian firm sold a ship to a Swiss firm and gave the Swiss client an option of paying either AUS10,000 or SF15,000 in 9 months. (i) In above, the Australian firm efficiently gave the Swiss client a free option to buy up

  • Q : Data Case Please assist with the

    Please assist with the attached Data Case assignment

  • Q : What impacts have on value of a

    What impacts have on the value of a business of high inflation?

  • Q : Llustrate illiquidity risk and small

    My investment bank told me that beta given by Bloomberg incorporates the illiquidity risk and small cap premium since Bloomberg does well-known Bloomberg adjustment formula. Is it true?

  • Q : What is optimal capital structure What

    What is optimal capital structure?

  • Q : Evaluating Beta of a Corporation

    Baldwin Corporation is planning to expand into the business of providing on-demand movies. Baldwin has debt-to-equity ratio of .25, its pretax cost of debt is 9%, and its marginal tax rate is 40%. The Harrington Corporation is already in the on-demand movie business,

  • Q : State capital formation Capital

    Capital formation: It is an increase in the stock of capital in particular period is termed as capital formation.