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1. BUS 401 Week 4 DQ 2 Cost of Capital - New
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2. BUS 401 Week 4 DQ 2 Cost of Capital - New
Corporations often use different costs of capital for different operating
divisions. Using an example, calculate the weighted cost of capital (WACC). What
are some potential issues in using varying techniques for cost of capital for
different divisions? If the overall company weighted average cost of capital
(WACC) were used as the hurdle rate for all divisions, would more conservative
or riskier divisions get a greater share of capital? Explain your reasoning.
What are two techniques that you could use to develop a rough estimate for each
division’s cost of capital? Your initial response should be 200 to 250 words