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Answer Posted / neerajkumar.che
Hello Freinds,
As WACC standfor weighted Average cost of capital.As you
know capital structure of the company is mix of long term
debt and equity and company tries to maximize the
shareholders wealth by adopting the proper mix of debt and
equity.So WACC is calculates based on the cost of the
capital of eaach component multiplied by its weight.It is
the minimum cost of capital to the company which discounted
the future inflow againts the inital outflow to have
maximum value to company.
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