Weighted average of the costs of debt and preferred stock

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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 came solely in the form of retained earnings versus 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: EM131529322

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Weighted average of the costs of debt and preferred stock : The WACC is a weighted average of the costs of debt, preferred stock, and common equity.

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