Question of the day
2026-07-09
Should WACC be the same for every company in a sector? When would you adjust it?
Answer it out loud first — like you would in the room. Then check yourself:
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Model answer
No. WACC is company-specific: it depends on the firm's beta/business risk, its capital structure, its credit quality (cost of debt), its tax rate, and its currency. Two firms in the same sector with very different leverage or credit ratings will have different WACCs. You would also adjust for country/currency risk (different risk-free rate and country risk premium) and arguably a size premium for smaller, riskier companies. A single 'sector WACC' is a simplification.
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