Explain how you would calculate the weighted average cost of capital (WACC) and its components for your project.
For the purpose of this assignment, a project is defined as any endeavor that had a capital outlay. Pick a project you have recently completed or one you would like to complete in the near future. This could be a project in your home, place of work, or even church or other organization with which you are familiar. Respond to the prompts below.
- Introduce your project with a reflection on the importance of selecting the right projects in which to invest capital. Do we always select those projects that have the highest return on investment (ROI)?
- Describe the relationship between risk and return and how you would measure for both in your project. What other factors play into capital budgeting decisions?
- Explain how you would calculate the weighted average cost of capital (WACC) and its components for your project.
Your essay should be at least two pages in length, not counting the title and reference pages. You are required to cite and reference at least your textbook. Use APA format to cite in-text and reference citations.