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By taking a weighted average, we can see how much interest the company has to pay for every dollar it finances. It is the appropriate discount rate to use for cash flows with risk that is similar to that of the overall firm. It gives companies an insight into the cost of their financing, can be used as a hurdle rate for investment decisions, and acts as a measure to be minimized to find the best possible capital structure for the company Investors use WACC to help decide whether a company represents a good investment opportunity.

Mgt101 midterm solved papers

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Mgt midterm solved papers