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Weighted Average Cost of Capital (WACC)

January 2nd, 2024|Valuation Glossary|

The Weighted Average Cost of Capital (WACC) is the average cost of the money a company uses to finance its operations. It considers the cost of both debt and equity financing. It is a measure of how much return the company needs to provide to its investors in order to compensate for the risk they are taking by investing in the company. The WACC is used to evaluate the attractiveness of investment opportunities and to determine the minimum rate of return required for a project to be considered worthwhile.

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