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In Constructing a Model,economists

question 168

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In constructing a model,economists:


Definitions:

Share Price

The price of a single share of a company's stock.

Interest Rate

The amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal, usually on an annual basis.

Optimal Capital Structure

The ideal mix of debt and equity financing that minimizes a company's cost of capital and maximizes its value and stock price.

WACC

Weighted Average Cost of Capital, a calculation of a firm's cost of capital that weighs each category of capital proportionately.

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