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No, the WACC should not be used to evaluate all potential projects, especially if they vary in risk. The rate should be adjusted for risk. If the WACC is used to evaluate all projects, then projects that are of high risk might be incorrectly accepted and projects that are of low risk might be incorrectly rejected.
The weighted common fee of capital (WACC) represents a firm's common after-tax price of capital from all assets, including commonplace inventory, favored inventory, bonds, and different styles of debt. WACC is the common price an employer expects to pay to finance its property.
The weighted average price of capital (WACC) tells us the go back that creditors and shareholders expect to acquire in return for supplying capital to an enterprise. as an example, if lenders require a 10% go back and shareholders require 20%, then an organization's WACC is 15%.
The weighted average fee of capital is the fee that an employer is predicted to pay on common to all its protection holders to finance its belongings. The WACC is normally referred to as the firm's price of capital. Importantly, its miles are dictated through the outside market and now not by means of control.
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