Advertising

Wacc

• See: Weighted average cost of capital.

 
 Embedded terms in definition
 Average cost of capital
Average
Capital
Cost of capital
Weighted average cost of capital
Weighted average
 
 Referenced Terms
 Weighted average cost of capital: Abbreviated Wacc. Reflects the expected average future cost of funds for the upcoming year; found by weighting the cost of each specific type of capital by its proportion in the firm's capital structure.The average cost of all capital used by a firm. In the context of valuing firms, if the capital is a mixture of debt and equity. The discount rate is called weighted average cost of capital.
Wacc = (1 - tc) * Rd * D/(D+E) + Re * E/ (D+E)
Where tc is the corporate tax rate , Rd is the contractual interest rate on (new) debt, Re is the discount rate on equity, D and E are the market values of debt and equity respectively. The return of all projects accepted by the corporation must exceed the weighted average cost of capital (WACC) to create value for the shareholders.Expected return on a portfolio of all the firm's securities. Used as a hurdle rate for capital investment.

<< Wac Wage and rent subsidies >>

How to Ace Your First Test Managing Real Money in the Real World: As a teen, you're beginning to make some grown-up decisions about how to save and spend your money. That's why learning the right ways to manage money…right from the start…is important. Here are suggestions. More...

We may think there is willpower involved, but more likely… change is due to want power. Wanting the new addiction more than the old one. Wanting the new me in preference to the person I am now. – George Sheehan

Advertising



Copyright ©2009-2018 GVC. All rights reserved.