Valuation
Weighted Average Cost of Capital
Definition
What is Weighted Average Cost of Capital?
The blended required return of debt and equity capital, weighted by their market values.
Example in practice
How This Looks in Practice
A company uses a 14% WACC to evaluate operating projects.
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Related Terms
Valuation
Market Value
The price at which an asset could trade in the market at a given time.
ValuationIntrinsic Value
An estimate of an asset's underlying economic worth based on expected cash flows, assets, or earning power.
ValuationFair Value
An estimate of an asset's appropriate value under specified assumptions or accounting standards.
Capital BudgetingNet Present Value
Present value of expected cash inflows minus present value of expected cash outflows.