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1 year ago

He wacc is the appropriate discount rate for use with projects but should be adjusted for higher risk ones

1 answer:

8 0

The WACC is the appropriate discount rate for use with average projects but should be adjusted upward for higher-risk ones.

Securities analysts may use WACC when evaluating the value of investment opportunities. For example, in discounted cash flow analysis, as a discount rate for future cash flows, he can apply WACC to derive the net present value of the firm.

Using the WACC discount rate makes the present value of investment appear higher than it actually is.

Businesses typically use the weighted average cost of capital (WACC) as the discount rate. This is to take into account the rate of return expected by shareholders. DCF has limitations. Primarily, it relies on estimates of future cash flows that may be inaccurate.

Learn more about WACC at

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3 years ago

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4 years ago

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The certificate of deposit be worth $338496.8 at the end of five years if interest is compounded at an annual rate of 9%

Explanation:

Certificate of deposit of 220000 after 5 years @ 9% is calculated as below

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4 years ago

He wacc is the appropriate discount rate for use with ______ projects but should be adjusted ______ for higher risk ones

He wacc is the appropriate discount rate for use with projects but should be adjusted for higher risk ones