9. Company Cost of Capital Flashcards
1
Q
What is the cost of equity?
A
The return that equity investors require on their investment in the firm
2
Q
What is the cost of debt?
A
The return that lenders require on the firm’s debt
3
Q
What is the WACC?
A
The weighted average cost if capital, The weighted average of the costs of debt and equity
4
Q
What is the pure play approach?
A
Use of a WACC that is unique to a particular project
