Explain effect of dividend policy and size of capital budget

Reference no: EM1315040

Explain Effect of Dividend policy and Size of capital budget on WACC

The WACC is a weighted average of the costs of debt, preferred stock, and common equity. Would the WACC be different if the equity for the coming year will all come in the form of retained earnings versus some equity from the sale of new common stock? Would the calculated WACC depend in any way on the size of the capital budget? How might dividend policy affect the WACC?

Reference no: EM1315040

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