I’m working on a finance discussion question and need an explanation and answer to help me learn.
- What do we mean by a corporation’s Weighted Average Cost of Capital (WACC)?
- What is the significance of a corporation or one of its divisions having a positive Economic Value Added (EVA)?
- What would happen to a corporation’s stock price if actual return on its average-risk investments was higher than its WACC. And what would happen to a corporation’s stock price if actual return on its average-risk investments was consistently lower than its WACC?