Weighted Average Cost of Capital Cost of Capital

Weighted Cost of Capital

Introduction

One of the functions of the Financial Manager is to locate external funding sources and recommend the most beneficial combination of financial sources, and in this way, determine the financial expectations of the owners of the company. It is known that each component of the debt (liabilities and equity) has an implicit cost (Debt ratio, opportunity cost) and can be achieved to maximize the investment of the owners when possible to reduce, as much as possible, the financial cost of external financing product and self-financing. In finance there is a ...