|REMARKS||Weighted Average Cost of Capital||All capital sources (stock, preferred stock, bonds and any other long-term debt)||This is calculated by multiplying the cost of each capital component by its proportional weight and then summing.||An average that takes into account the proportional relevance of each component, rather than treating each component equally.
(This can be calculated in Excel using SUMPRODUCT)||Companies create value for investors by earning a return on the invested capital that is above the cost of that capital||WACC is expressed as a percentage (similar to interest)|
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