Submit a 2-page evaluation of the use of weighted average cost of capital (WACC) in the capital budgeting process. In your evaluation, do the following:

Estimate Wells Fargo weighted average cost of capital. You can use the income statement information to estimate the tax rate.

If Wells Fargo company uses this in the capital budgeting process (i.e., as the discount rate in NPV and IRR), what assumptions are they making?

Does Wells Fargo face any particular difficulties in using this rate? For example, does Wells Fargo have different divisions or units that might have differing levels of risk?

Be sure to include any calculations you might have made, and describe which method you used to find the required rate of return on debt for Wells Fargo.

Category: Essays