00:01
Hello students, here is a question.
00:02
The instructor said the reason why the company weighted average cost of capital is crucially important.
00:08
So, we have an options given here.
00:10
We will write down the answers, sorry options.
00:12
The first is the wacc is the minimum rate of return to be earned on common stock and the second is the wacc is the rate of return which must be earned by the common and preferred stockholders.
00:52
The common and preferred stockholders and option c is the wacc is the minimum rate of free cash, free cash flow return to be earned, earned on total asset and option d is the wacc is the maximum, is the maximum amount of financial cost, financial cost a company can support, a company can support.
01:49
So, these are the options we have.
01:51
The question asks the reason why the company weighted average cost of capital is crucially important.
01:57
So, option a states that wacc is the minimum rate of return to be earned to the common stock...