The weighted average cost of capital can also be defined as the:
A) Market weighted cost of equity financing.
B) Rate of return based on net book value.
C) Adjusted homemade leverage rate of return.
D) Required return on a firm's overall assets.
E) Basis of M&M Proposition I.

Question

Quizplus · Accepted Answer

The weighted average cost of capital (WACC) is essentially the required return on a firm's overall assets, as it represents the average rate that a company is expected to pay to finance its assets, weighted by the proportion of each source of capital (debt and equity).

The Weighted Average Cost of Capital Can Also Be Defined