Weighted Average Cost of Capital

Definition: The average rate of return a company must pay to all its security holders (debt and equity) to finance its assets. WACC = (E/V)·Re + (D/V)·Rd·(1−T)…

The average rate of return a company must pay to all its security holders (debt and equity) to finance its assets. WACC = (E/V)·Re + (D/V)·Rd·(1−T). Used as the discount rate in DCF analysis and for evaluating investment decisions.