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"The cost of capital. The discount rate applicable to projects" icon

The cost of capital. The discount rate applicable to projects

This multimedia technical note attempts to teach students how to calculate the Weighted Average Cost of Capital (WACC). It also shows interactive graphs where the students can analyze the effects of Equity Beta, Asset Beta and the Financing Mix of the company on the WACC and the NPV. These graphs are complemented by several exercises At the end of the technical note, there is a simple practical case about the correct procedure to use for calculating the WACC, when a company is going to float on the stock market. In order to complement this part, some web sites are available where the financial information needed to complete the exercise can be found (Equity Betas from different sector companies and their Financing Mix.).


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