On Monday, the Association for Financial Professionals issuedits “2013 AFPEstimating and Applying Cost of Capital Survey Report.” Thesurvey of 424 finance professionals found that although financialplanning and analysis (FP&A) might be the department that makesthe most use of weighted average cost of capital (WACC) figures, itis generally not the department responsible for coming up with WACCestimates. In 46 percent of respondents' companies, treasury isresponsible for WACC calculations. This responsibility falls tofinance in 32 percent of companies and to FP&A in only 18percent.

More than half of respondents think their organization's WACCestimate is within 50 basis points (bps) of its actual cost ofcapital, but 11 percent believe the WACC is off by more than 100bps. Large companies are three times as likely to think their WACCcalculations are more than 1 percentage point away from actual costof capital (see Figure 1).