What is considered to be a high WACC and why? WACC

Which WACC is high and why?
A company’s average weighted capital expense is the total cost that it anticipates having to pay in order to finance its assets. (Segal 2020). The price of equity is added to the costs of borrowing. WACC indicates that a company is more likely to pay higher prices for the capital it has invested. In order to compensate for the higher risk, investors will often seek a higher return on investments that have increased in risk. Low WACC means that investors are not paying as much to acquire stock or debt. Businesses with low WACC tend to be more successful, larger, and therefore safer to invest. If the business has a long-term record, it can get capital at a lower cost. WACC is the amount of money required to generate an additional dollar in funding. WACC = cost of additional funding. For example, $1 is equal to $0.05. (Segal, 2020). You might think that $0.05 is the interest payment on debt. Or the dividend, capital return required by private investors. Cont…

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