This paper will discuss the optimal debt-equity mix to finance the expansion, with WACC as the benchmark. I will use the Weighted-Average Cost of Capital to decide on the expansion plans and the optimal debt-equity mix. This paper will also explain how I will decrease the level of debt in the capital structure by at least one-third to avoid the threat of bankruptcy. Additionally, this paper will summarize the following questions. (1) Why is WACC important to an organization and (2) What impact does WACC have on capital budgeting and structure? Businesses use Weighted-Average Cost of Capital (WACC) to evaluate the project or to make capital budgeting decisions. Additionally, WACC is the overall required return on the company as a whole and as such, is frequently used within the company by the director to decide the economic viability of expansionary mergers and opportunities. The Weighted Average Cost of Capital is the suitable reduction rate to use for cash flows with risk that is comparable to that of the overall company. Knowing the net present v......

Word Count: 1384
Page Count: 5.5 (250 words a page / double spaced)

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