WACC

Definition

Weighted Average Cost of Capital. An average representing the expected return on all of a company's securities. Each source of capital, such as stocks, bonds, and other debt, is assigned a required rate of return, and then these required rates of return are weighted in proportion to the share each source of capital contributes to the company's capital structure. The resulting rate is what the firm would use as a minimum for evaluating a capital project or investment.

Use WACC in a sentence

Before starting on a new project or initiative most companies calculate the WACC to see if the project is worthwhile and proves to be profitable.

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ROC Return on Capital