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On the Weighted Average Cost of Capital
The Journal of Financial and Quantitative Analysis, 1973The weighted average cost of capital is a widely used concept in the theoretical literature of finance as well as in the analysis of capital expenditures of business firms. The importance of the concept derives from its use as the cutoff point for investment in capital projects and as an indicator of optimal capital structure.
Raymond R. Reilly, William E. Wecker
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Flotation Costs and the Weighted Average Cost of Capital
The Journal of Financial and Quantitative Analysis, 1976The weighted average cost of capital (Ko) is presented in virtually all textbooks in financial management and capital budgeting as a practical concept fundamental to the actual selection of optimal financial and investment alternatives. As often employed Ko can be defined aswhereKo = the weighted average cost of capital,Ks = the cost of equity capital ...
John R. Ezzell, R. Burr Porter
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The Weighted Average Cost of Capital: Some Questions on its Definition, Interpretation, and Use
The Journal of Finance, 1973exaly +5 more sources
THE WEIGHTED AVERAGE COST OF CAPITAL: COMMENT
The Journal of Finance, 1975IN A RECENT article in this Journal, Prof. Ardittil argued that the weighted average cost of capital could only be properly employed by a firm possessing earnings expectations in the form of a perpetuity. We shall contend that this point is invalid and can be traced to a basic misunderstanding of the concept of income.2 Arditti defined earnings before ...
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On the Weighted Average Cost of Capital: Reply
The Journal of Financial and Quantitative Analysis, 1975The comment by Linke and Kim correctly observes that the assumption regarding the maintenance of constant proportional use of capital sources is not appropriate for our argument and should be deleted. As our analysis did not make use of this assumption, the two conclusions hold.1.
Raymond R. Reilly, William E. Wecker
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The Weighted-Average Cost of Capital
SSRN Electronic Journal, 2017This note provides a conceptual introduction to the weighted-average cost of capital (WACC). It discusses and provides examples of calculating the WACC and its components. It is useful as a parallel reading for cases that require estimation of WACC or as background reading for a class discussion of WACC and its use as a hurdle rate.
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Weighted Average vs. True Cost of Capital
Financial Management, 1973D3/(l+ke)3 + . . , (2) where I1, 12, 13, . . . are the expected interest payments to the creditors, D1, D2, D3, . . . are the expected dividend payments to the stockholders, ki is the cost of debt, ke is the cost of equity; B is the market value of debt, and S is the market value of equity.
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The Weighted Average Cost of Capital: A Caveat
The Engineering Economist, 1992(1992). The Weighted Average Cost of Capital: A Caveat. The Engineering Economist: Vol. 37, No. 2, pp. 178-183.
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Understanding the Minefield of Weighted Average Cost of Capital
Business Valuation Review, 2005In a previous article, I explained how we can use an iterative approach to reach value estimates that give consistent values whether we use the equity approach or the invested-capital approach to firm valuation. In response to that article, Alix Mandron wrote that these methods do not work correctly. This article is in response to Mandron's criticisms.
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On the Weighted Average Cost of Capital with Personal Taxes
Accounting and Business Research, 1992Abstract This paper considers the impact of personal taxation on the Miles and Ezzell (1980) result that the weighted average cost of capital is the appropriate rate for discounting after corporation tax cash flows in an MM (Modigliani and Miller, 1958, 1963) perfect capital market with corporation tax.
Colin D. B. Clubb, Paul Doran
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