The weighted-average cost of capital is the return the company needs to earn after tax in order to satisfy all its security holders.

Question

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The definition of the weighted-average cost of capital (WACC) is accurate. WACC represents the minimum rate of return that a company needs to earn on its existing assets to ensure that its investors are compensated adequately for their investment. It is calculated by taking a weighted average of the costs of all the company's funding sources, including equity and debt. This rate is used as a discount rate for capital budgeting decisions and various financial analyses.

The Weighted-Average Cost of Capital Is the Return the Company