BUS 401 Week 4 DQ 2 Cost of Capital

BUS 401 Week 4 DQ 2 Cost of
Capital
Cost of Capital
Corporations often use different costs of capital for
different operating divisions. Using an example, calculate
the weighted cost of capital (WACC). What are some
potential issues in using varying techniques for cost of
capital for different divisions? If the overall company
weighted average cost of capital (WACC) were used as the
hurdle rate for all divisions, would more conservative or
riskier divisions get a greater share of capital? Explain
your reasoning. What are two techniques that you could
use to develop a rough estimate for each division’s cost of
capital? Your initial response should be 200 to 250 words.
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