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The Weighted Average Cost of Capital (WACC) affects a company's investment decisions by indicating the minimum return that a company must earn on an existing asset base to satisfy its creditors, owners, and other providers of capital. If a company's investment opportunities are expected to generate a return less than the WACC, the company may decide not to proceed with the investment because it could decrease shareholder value. Conversely, if the expected return on investment is greater than the WACC, the company is likely to undertake the investment.
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Are you looking to determine which investment opportunities are best for your company, especially when multiple options are available? How can you tel...
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If you also want to compare your investment's performance against other opportunities, the WACC tab is the way to go. The Weighted Average Cost of Capital (WACC) tab represents the average rate a company should pay to finance its assets. At the center of WACC is the "unlevered beta". A higher unlevered beta means that a company is more volatile and riskier than the market average, while a lower unlevered beta means that a company is less risky.
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