When exploring the Weighted Average Cost of Capital (WACC) we were introduced to the fundamental components that firms use to estimate their hurdle rate. Berk and DeMarzo (2020) interviewed Shelagh Glaser, the then VP of finance and the controller at the Client Computing Group at Intel about their WACC estimates (see page 434). In this interview, she highlighted the inputs that her firm uses to calculate their WACC and provides numerous examples of inputs that they must consider when they re-estimate their WACC each year. Highlight two of these inputs and indicate how changes in these inputs are likely to impact Intel’s hurdle rate; in addition, illustrate how these changes impact the projects that a firm accepts. Include at least two citations that support your response.

Answer rating: 100% (QA)

The weighted average cost of capital WACC is a calculation of a firms cost of capital in which each category of capital is proportionately weighted All sources of capital including common stock prefer... View the full answer