💼 Pre-MBA Exam Prep

WACC (Weighted Average Cost of Capital) represents:

A The interest rate on debt
B The blended rate of return a company must earn on its assets to satisfy all capital providers
C Equity returns only
D The risk-free rate

✓ Correct Answer: Option B

WACC = (E/V × Re) + (D/V × Rd × (1-T)). Blends the cost of equity and after-tax cost of debt weighted by their proportions. Used as the discount rate for NPV calculations.

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