Weighted Average Cost of Capital (WACC)
WACC stands for Weighted Average Cost of Capital, the average rate a company must pay to finance its operations from debt and equity, weighted by each source's share of total financing.
Example: Example: If a firm finances with 50% debt at a 5% pre-tax cost and 50% equity with a 9% cost of equity, and the corporate tax rate is 21%, the WACC would be about 6.5%.
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