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Divisional WACC will be 8.13%
What is Divisional WACC?
The divisional or project weighted average cost of capital (WACC) is the hurdle rate or discount rate used to evaluate divisions or projects that have a different risk than the company's overall risk, which includes all projects and divisions.
The weighted average cost of capital (WACC) measures a company's total cost of capital, including common stock, preferred stock, bonds, and other kinds of debt.
In theory, WACC indicates the cost of raising an additional dollar. A WACC of 5%, for example, suggests that the corporation must pay an average of $0.05 to obtain an additional $1. This $0.05 could represent the cost of debt interest or the dividend/capital return demanded by private investors.
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