Determining the Debt-Equity Mix Simulation In The Debt-Equity Mix Simulation, the organization El Caf� has to consider how to fund its expansion plan. The best way to attract investors for this expansion project is for the organization to apply the Weighted Average Cost of Capital (WACC) Tool. WACC us the average cost of capital invested in a company, weighted by that company�s capital structure of debt and equity funding. (CEO.com) The WACC tool is used to make investment decisions based on the principal that the rate of return on an investment should be greater than the cost of capital. This tool helps the investor determine if the intended investment or purchase is worth undertaking. The formula for calculating WACC =D/Vx rd (1-Tc) + E/V x re. D represents the debt component, E is the equity component, re is the equity rate and V=sum of the debt equity components and Tc is the corporate tax rate. WACC is determined by market conditions, the organizations capital structure, dividend policy, and the organizations investment policies. The object of the simulation is to g......

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