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References (7)
-
S. Keane (1976)
THE TAX-DEDUCTIBILITY OF INTEREST PAYMENTS AND THE WEIGHTED AVERAGE COST OF CAPITAL — A REPLYJournal of Business Finance & Accounting, 6
-
C. BabcockGuilford (1985)
Duration as a Weighted Average of Two FactorsFinancial Analysts Journal, 41
-
James Ang (1973)
Weighted Average vs. True Cost of CapitalFinancial Management, 2
-
J. Miles, J. Ezzell (1980)
The Weighted Average Cost of Capital, Perfect Capital Markets, and Project Life: A ClarificationJournal of Financial and Quantitative Analysis, 15
-
Fred Arditti (1973)
THE WEIGHTED AVERAGE COST OF CAPITAL: SOME QUESTIONS ON ITS DEFINITION, INTERPRETATION, AND USEJournal of Finance, 28
-
J. Beránek (2009)
OF FINANCIAL AND QUANTITATIVE ANALYSIS DECEMBER 1975 A LITTLE MORE ON THE WEIGHTED AVERAGE COST OF CAPITAL -
Charles Linke, Moon Kim (1974)
More on the Weighted Average Cost of Capital: A Comment and AnalysisJournal of Financial and Quantitative Analysis, 9
- Publisher
- Emerald Publishing
- Copyright
- Copyright © Emerald Group Publishing Limited
- ISSN
- 0140-9174
- DOI
- 10.1108/eb028488
- Publisher site
- See Article on Publisher Site
Abstract
Arditti 1973 was the first article to discuss the weighted average cost of capital WACC. Since then, numerous papers have fine tuned the exact definition and interpretation of the WACC and how it can be used in capital budgeting as a cutoff rate Ang 1973, Babcock 1985, BenHorin 1979, and Miles and Ezzell 1980. To date, however, no article has quantified the magnitude and frequency of capital budgeting errors. The purpose of the article is to show the significance and frequency of errors that will occur when the WACC is even slightly miscalculated.
Journal
Management Research News – Emerald Publishing
Published: Aug 1, 1996