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What is weighted average cost of capital

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Reference no: EM13910043

a. What is Weighted Average Cost of Capital (WACC)? Identify TWO (2) factors that affect the WACC of a company.

b. Would the firm's cost of external equity capital be the same as the required rate of return on the firm's outstanding common stock? Why or why not?

1- Using debt can help reduce the agency problem that may arise between the management of a company and its shareholders. Explain.

2- Explain the effects of the following on the company's weighted average cost of capital:

i) Floatation cost

ii) Reduction in corporate tax

Reference no: EM13910043

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