WACC Calculation: Ignored Factors

Ignore Cost of Equity

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Question

In the calculation of WACC, which of the following should be ignored?

Answers

Explanations

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A. B. C. D.

Explanation

Short-term debt is not a part of the capital structure. The capital budgeting process allocates resources to long-term asset investments and as such is financed by liabilities/capital of similar maturity. Hence, short-term/current liabilities do not enter into WACC calculations.