What is MT 217 ’s WACC, which will be used as the required rate of return for this project?

Mt 217 electronics is a midsized electronics manufacturer located in

MT 217’s Weighted Average Cost of Capital (WACC) is the rate of return that a company requires on average from all its investments, and is calculated by taking into account the cost of equity and debt components. To find this figure, one must first calculate the cost of each individual capital component; for instance, the cost of equity can be estimated using methods such as the Gordon Growth Model or Capital Asset Pricing Model etc. Similarly, when calculating WACC for debt financing; relevant factors such as risk-free rates, company/industry specific risks etc. must also be taken into consideration.

Once these items have been factored in then they can be combined together to arrive at MT 217’s WACC which should serve as an indication of what their required rate of return needs to be for any given investment project. This figure will vary depending on market conditions and other external influences so it is important that financial managers regularly review their calculations to ensure accuracy; with a good understanding of how this metric works, firms should have no problem setting up effective strategies going forward.