WACC
- From: Verloc <verloc@xxxxxxxxxxxxxxxxx>
- Date: Sat, 24 Dec 2005 01:47:14 +0200
Hi to all,
It is the first time I write to this ng and I don't know if it is the
right one for questions like the one I make.
For academic purposes (postgraduate course exercise) I want some help
to the following sentence:
"Weighted average cost of capital (WACC) of a firm is the appropriate
discount rate when we examine an investment which is going to be
financed in a same way as the current capital structure of the firm
and has the same risk as the average risk of the already invested
capitals." (it is translated from Greek, so sorry for the mistakes)
If someone has a material that can help me I would appreciate it very
much. I don't want information about the definition or the estimation
of WACC, but only why it is the appropriate discount rate to use for
cash flows with risk that is similar to that of the overall firm.
.
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