Using a numerical example to show that when you discount the cash flows of capital from the project on the weighted average cost of capital, you get the same result as the net present value you get when the discounted cash flows to equity at their own expense. In addition, shows why it is much easier to do the calculation of the net present value using a weighted average cost of capital (assuming a fixed ratio of debt and the balance of the market value) than to do the same calculation using the cost of equity capital. "Hide
by William E. Fruhan 4 pages. Publication Date: June 6, 2002. Prod. #: 202128-PDF-ENG
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