Discuss Why WACC Is Used Most Often by Managers to Make

question 34

Essay

Discuss why WACC is used most often by managers to make capital budgeting decisions.

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Definitions:

Return On Total Assets

A financial ratio that measures the profitability of a company relative to its total assets.

Year 2

This refers to the second year of a business or financial operation, often used in context to compare data year-over-year.

Earnings Per Share

A company's net profit divided by the number of its outstanding shares, indicating the portion of a company's profit allocated to each share of stock.

Dividend Yield Ratio

A financial metric that measures the dividend per share a company pays out to its shareholders relative to its share price, indicating the income return on the investment.