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What does the “weight” refer to in the weighted average cost of capital?

What does the “weight” refer to in the weighted average cost of capital?

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Expert Solution

Weight refers to the PROPORTION OF DIFFERENT TYPES OF CAPITAL IN THE OVERALL CAPITAL OF THE COMPANY.

Weights will mean that how much equity capital or debt capital or preference share capital are in total capital of the company, so it will be the percentage of different type of capital in the overall capital structure of the company.

For example, if the equity capital is 50 and the overall capital of the company is 100, then the weight of equity will be 50%.

jeff jeffy answered 1 year ago
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