WACC and Capital Allocation

WACC and Capital Allocation

In any company, the weighted average cost of capital (WACC) is one of the critical parameters in strategic decision-making. We offer extensive knowledge in the setting up of a WACC framework for international use.

The WACC is used as:

  • a discount rate in valuations,
  • a hurdle rate for capital allocation, and
  • a discount rate for impairments.

Despite the fact that a simple WACC calculation is seen as text book material, the determination and application of a fair and usable WACC is far from standard. In our opinion, determining the WACC involves both art and science.

We can assist in:

  • defining the group-wide WACC,
  • specific division or country WACC, and
  • setting up capital allocation strategy and policy from a corporate finance point of view.

Our added value is our specialized expertise in determining the WACC. The WACC calculations are supported by extensive documentation, describing all assumptions and inherent choices.

 

Interested in WACC and capital allocation?

Sander van Tol
Get in touch with Sander van Tol or for more information about WACC and capital allocation.