The WACC is usually used as the risk-adjusted required rate of return for new projects that are of the same average risk as the firm's existing projects.

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The WACC (Weighted Average Cost of Capital) is commonly used as the discount rate in capital budgeting analysis to evaluate new projects. This is because it represents the minimum required rate of return that a company must earn on its investments to satisfy both its debt and equity investors. Since the WACC is a blended cost of debt and equity financing, it reflects the risk of the company's existing assets and the overall market conditions. Therefore, it is reasonable to use the WACC as a risk-adjusted benchmark to assess whether new opportunities generate sufficient returns to compensate for their risk levels.

The WACC Is Usually Used as the Risk-Adjusted Required Rate