What is Weighted Average Cost of Capital (WACC)?
Andrew Stolz
AUGUST 5, 2020
Definition of Weighted Average Cost of Capital. The WACC is the average cost of raising capital from all sources, including equity, common shares, preferred shares, and debt. Formula: [Cost of Equity * % of Equity] + [Cost of Debt * % of Debt *(1 – Tax Rate)] + [Cost of Preferred Stock * % of Preferred Stock].
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