finance management question 8

Think importance of understanding the cost of capital to a business. Comment on why it is important, and explain why as debt increases (in capital structure), eventually the WACC will increase (despite the fact debt is usually the lower cost component cost of capital). How does your current or past company, or one you know of, decide on its cost of capital? Finally, What assignments/assessments from this course aligned with your profession? How can the lessons you have learned positively affect your career success (now or in the future)? answer the post in couple questions and then

below post agree or disagree within 2-3 sentences

When debt increases in the capital structure, eventually the weighted average cost of capital (WACC) will increase. Any type of change to the capital structure can affect the cost of capital. The WACC is what measures the total cost of capital. If the debt of a business is not equal to the cost of capital, WACC affects the capital structure.