I got the the interest expense from Microsoft, it is in negative: -2.73 billion (source: MSFT Annual Report). Does this mean Microsoft is receiving interest instead of paying it?

If my cost of debt is negative, the WACC is also negative. What does a negative WACC tells us?

  • $\begingroup$ I am not an accountant. I believe that number is shown as negative in that table because Microsoft is paying 2.73 Billion in interest, while they earn positive Dividend and Interest Income. In other words the signs are being used to distinguish inflows and outflows. But check with an accountant. Negative WACC cannot exist, that I do know. $\endgroup$ – Alex C May 14 at 17:30

In this case nominal rates negative rates are possible, and this really means that the company recieves cash flow, but doesn't mean eg. Microsoft is riskless. Probably $WACC_{MSFT} = r_{riskfree}+r_{risk premium}$ is still negative.

Take into account the Fisher equation which can explain this situation.


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