WACC for geared and ungeared companies

 Hi All!

I was doing NPV appraisal techniques and understood a thing or two about it. The costs of capitals play a crux and Ungeared company's WACC is lower than Geared company's WACC.

Ungeared company:

Geared Company:

So from the onset we can make out the difference and it's making me wonder if Gearing is important at all? Lets find out about it in our FCFE & FCFF analysis in the next session.

Cheers!!