Businesses strive to optimize their cost of capital to enhance value. Some strategies include:
Maintaining Optimal Capital Structure: A balanced mix of debt and equity can minimize WACC. Improving Credit Rating: Enhancing financial health and operational performance can lead to better credit ratings and lower borrowing costs. Efficiently Managing Risk: Implementing robust risk management practices can lower the perceived risk and thus the required return by investors. Tax Planning: Effective tax planning can reduce the after-tax cost of debt.