Cost of capital : Question 3
We agree that the WACC is computed as a weighted average of the after-tax cost of debt and the cost of equity. What would you use as the cost of capital if the company has a net cash position ?

There are two possible approaches, assuming that this cash is relatively structural and not cyclical.

For more information, see chapter 29 of the Vernimmen.

Cost of capital : Question 3We agree that the WACC is computed as a weighted average of the after-tax cost of debt and the cost of equity. What would you use as the cost of capital if the company has a net cash position ?

Cost of capital : Question 3
We agree that the WACC is computed as a weighted average of the after-tax cost of debt and the cost of equity. What would you use as the cost of capital if the company has a net cash position ?