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Regarding Wacc

This topic has 3 replies, 2 voices, and was last updated 1 month ago by John Moffat.

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July 10, 2022 at 12:12 pm #660238
dennissherpa101
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sir one of the assumption for wacc is that it should not be project specific does that mean the finance was raised solely for that project? or is it something else can you describe it please thanks
July 10, 2022 at 4:03 pm #660244
John Moffat
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I do not state that as an assumption, so I don’t know where you read it.

It is not an assumption of the WACC.

An assumption when we use the WACC to appraise is that it is not going to change due to the new project (i.e. is not project specific).
July 11, 2022 at 4:46 am #660269
dennissherpa101
- Topics: 43
- Replies: 56
It says the finance is not project specific.
sir can you also explain this line it is therefore not the marginal cost of the additional finance but the overall average cost of all finance raised that is required for project appraisal.
July 11, 2022 at 9:21 am #660275
John Moffat
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- Topics: 57
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It is stating (as I wrote before) that in Paper FM we assume that the WACC will remain as it is now and will not change due to doing the new project.
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