A firm's weighted average cost of capital is the average cost of the various short-term sources of financing employed by the firm.

Question

Quizplus · Accepted Answer

A firm's weighted average cost of capital (WACC) is the average cost of all long-term sources of financing, such as debt and equity. Short-term sources of financing, such as trade credit or lines of credit, are not typically included in the calculation of WACC.

A Firm's Weighted Average Cost of Capital Is the Average