WACC stands for Weighted Average Cost of Capital and it is the required rate of return on a firm. It is the average cost of financing a company's assets, taking into account the relative weights of each component of the capital structure, including debt and equity. The WACC is used to evaluate potential investments or projects by considering their expected returns against the company's WACC.

Solved

WACC Is The

Question 257

Multiple Choice

WACC is the:

A) Cost of obtaining equity ﬁnancing.
B) Required rate of return on a ﬁrm.
C) Average IRR of the ﬁrm's current projects.
D) Average rate of return needed to increase the value of a ﬁrm's stock.
E) Discount rate based on the pre-tax cost of capital.

Correct Answer: