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Concept10 min read
Weighted Average Cost of Capital (WACC)
The blended after-tax cost of a firm's debt and equity, weighted by their share of total capital. WACC is the hurdle rate every new investment must beat and the discount rate used in DCF valuation.
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- Definition
- Why it matters
- Formula
- Units & benchmarks
- Key levers
- Where it shows up in cases
- How it's charted
- Worked example
- Common traps
- Industry nuances
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