Question
The Capital Budgeting Spreadsheet can be a valuable tool in comparing different investment projects. It allows you to input various financial data related to each project, such as the cost of capital, equity, and debt. By calculating the Weighted Average Cost of Capital (WACC) for each project, you can compare their financing costs. This can help you choose the project with a lower cost of capital, thus making more informed investment decisions.
This question was asked on:
Use WACC when comparing projects with different capital structures or assessing a company's financing strategy. Suppose your company is considering two expansion projects with different financing options. Project A will be financed with 60% equity and 40% debt, while Project B will be financed with 40% equity and 60% debt. Calculating the WACC for each project allows you to compare their financing costs and choose the project with a lower cost of capital, enabling you to make more informed decisions. Just enter the required data on each section and the WACC will be displayed at the top of the tab.
Receive new free presentations every Monday to your inbox.
Full content, complete versions — No credit card required.
