Comparison: Taguchi method and full factorial design in WACC

Amir Ahmad Dar, Zameer Gulzar, Ramesh A. Babu, Layak Ali and G. Shreedevi

International Journal of Intelligent Enterprise, 2024, vol. 11, issue 3, 300-315

Abstract: To examine the effectiveness of two different experimental design techniques, Taguchi and full factorial design (FFD), in optimising the weighted average cost of capital (WACC). Several input variables, including total equity, total debt, tax rates, cost of debt, and cost of equity, have an impact on WACC. To set up trials and determine the optimal combination of these input elements for WACC, the Taguchi methodology was used. The Taguchi method is being applied for the first time to find the optimal combination for the cost of capital. The study uses the Taguchi L16 DOE, regression analysis, and the analysis of means (ANOM), all of which are carried out using the MINITAB 18 Software, to examine the effects of various input components. The experiment's results show that the Taguchi method and the FFD produce comparable performance results.

Keywords: Taguchi method; full factorial design; weighted average cost of capital; WACC; analysis of means; ANOM; regression. (search for similar items in EconPapers)
Date: 2024
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