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WACC (Weighted Average Cost of Capital)

= E/(D+E)*Cost of Equity + D/(D+E)*Cost of Debt*(1−Tax)

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WACC (Weighted Average Cost of Capital)

= E/(D+E)*Cost of Equity + D/(D+E)*Cost of Debt*(1−Tax)

Definition

WACC represents the blended cost of equity and debt capital, weighted by capital structure. Used as discount rate in DCF analysis. Formula accounts for tax deductibility of interest.

Related Topics

#cost of capital #discount rate #capital structure #dcf analysis

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Category: Fundamental

Fundamental analysis examines a company's financial health, management quality, and market position to determine intrinsic value.

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