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Purpose of calculating the firm wacc

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(1) A firm's weighted average cost of capital (WACC) is sometimes referred to as the hurdle rate. What is the purpose of calculating the firm's WACC? Why is the WACC referred to as the hurdle rate?

(2) Based on your opinion, which component cost (cost of debt, cost of preferred stock, cost of retained earnings, or cost of new common stock) is easier to calculate? Which component cost is more difficult to calculate? Why?

Reference no: EM133055872

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