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Weighted Average Cost of Capital Explained – Formula and Meaning

Valutico

The beta factor is used to calculate the cost of equity in the WACC formula and is a measure of a stock’s systematic risk, or the risk associated with the overall market. For example, some of the industries with the highest WACCs include telecommunications, technology, utilities, media, pharmaceuticals, and oil & gas.

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Weighted Average Cost of Capital Explained – Formula and Meaning

Valutico

The beta factor is used to calculate the cost of equity in the WACC formula and is a measure of a stock’s systematic risk, or the risk associated with the overall market. For example, some of the industries with the highest WACCs include telecommunications, technology, utilities, media, pharmaceuticals, and oil & gas.

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Weighted Average Cost of Capital Explained – Formula and Meaning

Valutico

The beta factor is used to calculate the cost of equity in the WACC formula and is a measure of a stock’s systematic risk, or the risk associated with the overall market. For example, some of the industries with the highest WACCs include telecommunications, technology, utilities, media, pharmaceuticals, and oil & gas.

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Startup Valuation: The Ultimate Guide

Equidam

10] , [23] , [2] Discount Rate: The rate used to discount future cash flows is typically the cost of equity, calculated via the Capital Asset Pricing Model (CAPM): Cost of Equity = Risk-Free Rate + Beta * Market Risk Premium. [23] 8] , [9] , [41] , [44] This involves maximizing risk-adjusted returns on each investment. [55]