
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.


Getting Your Finances Ready for Your Golden Years: If you're seriously considering retirement, you also should be seriously thinking about how to ensure that your financial life is as comfortable and stressfree as possible. Here are a few tips. More...

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