When is the Use of a Weighted Average Cost of Capital Appropriate?

5 (2 votes)

The WACC operates based on the assumption that it is less risky to invest with Other People’s Money (OPM). The question becomes, how often does a small business owner have access to OPM without any increased risk to their own equity invested?

Paul R. Hyde


Paul R. Hyde is an Accredited Senior Appraiser (ASA) in Business Valuation, Real Property, and Machinery & Equipment, a Certified General Appraiser in Real Estate, and he holds the Designated Member of the Appraisal Institute (MAI) designation. Paul R. Hyde is the only appraiser to hold the ASA professional designation in Business Valuation, Machinery & Equipment, and Real Property (confirmed by ASA in November 2017). Paul appraises all sizes of businesses from large private businesses for Employee Stock Ownership Plans (ESOPs) to small mom and pop businesses for divorces, a wide variety of machinery and equipment, virtually all types of real estate and livestock. Paul has taught classes for a variety of organizations in business valuation, investments, tax planning, and small business management. Paul works full time in the business, machinery & equipment, and real estate appraisal field.


When is the Use of a Weighted Average Cost of Capital Appropriate?
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