Question: [ PLEASE PROVIDE BRIEF AND STEP BY STEP ANSWER...MARKS WEIGHTAGE IS 2 0 ] - - - - - - - - - - -

[

PLEASE PROVIDE BRIEF AND STEP BY STEP ANSWER...MARKS WEIGHTAGE IS

20]

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What is the weighted average cost of capital

(

WACC

) ?

Explain why firms prefer to use WACC when taking investment decisions instead of the absolute cost of capital. Discuss the factors that affect the WACC. Also explain why different companies have different WACC?

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