What is the WACC?
- A The cost of equity only
- B The weighted average cost of all sources of capital, debt and equity
- C The interest rate on the company's largest loan
- D The average return on the company's assets
Answer
The weighted average cost of all sources of capital, debt and equity
WACC weights the after-tax cost of debt and the cost of equity by their proportions in the capital structure. It is the standard discount rate for project appraisal.





