The Weighted Average Cost of Capital (WACC) is used in
finance for several applications, including Capital
Budgeting analysis, EVA calculations, and firm
valuation. WACC obtained by the standard formula leads
to significant errors in Net Present Value of the Firm
calculations; particularly in those that apply perpetual
cash flow series. The present paper identifies the
problem, and provides alternative, and accurate formulas
to obtain WACC for Firm Valuation calculations. pdf
