The Weighted Average Cost of Capital is a key financial benchmark used in most organisations for strategic decision making. Common applications include capital allocation, project evaluation, performance measurement and impairment reviews. The Corporate Treasurer is well positioned to advise management on how best to use this key metric. Following these webinars, you will be equipped to use the Weighted Average Cost of Capital in a range of strategic applications.
In the first of two sessions on the Weighted Average Cost of Capital, we review the key applications of the Weighted Average Cost of Capital, and describe how to estimate the cost of capital for a range of applications. Topics covered include:
(i) review of the WACC formula and inputs, and sample calculation;
(ii) why we need WACC – review of applications for capital allocation, valuation, impairment testing, performance measurement, and regulatory pricing;
(iii) alternative roles of WACC – (a) cost of capital v hurdle rate (b) cost of capital and risk (c) company wide v divisional v project cost of capital (d) post tax and pre tax;
(iv) Sources of information for calculating WACC;
Issues in estimating WACC. This webinar will introduce these issues, which will be explored more thoroughly in the second webinar.
Tony Carlton, Associate Professor, Applied Finance Centre, Macquarie University
Tony manages the Corporate Finance stream in Macquarie University’s Master of Applied Finance. Tony presents elective subjects including Advanced Valuation, Capital Allocation Strategies and Corporate Financial Strategy.
Prior to joining Macquarie University, Tony had over 25 years’ experience in the manufacturing, resource and agricultural industries. Senior roles included Executive General Manager, Corporate Finance & Strategy, and Group Treasurer, at CSR. His experience includes all aspects of corporate finance and strategy, including project evaluation, strategic portfolio analysis, and the development and execution of growth strategies. He managed a number of large acquisitions and divestments both in Australia and overseas, and a number of large scale balance sheet restructurings.
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