Journal of Financial and Quantitative Analysis Vol. 9 No. 6 1974
More on the Weighted Average Cost of Capital: A Comment and Analysis
Abstract
The mathematical difficulties encountered when attempting to express the internal rate of return (IRR) of a combination of two or more investments as a weighted algebraic sum of the individual investments' IRRs has been recognized in the financial literature for some time. However, in a recent issue of this journal, Professors Reilly and Wecker (hereafter R-W) [3] apply the well-known mathematical impossibility of expressing the root(s) of a polynomial as an algebraic combination of the roots of related polynomials to question the validity of the weighted cost of capital (kw) concept.
- DOI
- 10.2307/2329740
- Volume
- 9
- Issue
- 6
- Pages
- 1069
- Sources
- crossref openalex