Weighted average cost of capital, abbreviated as WACC, helps in calcularing a firm's cost of financing by combining the cost debt and cost of equity structure togeather.
Weighted Average Cost of Capital Formula |
| \( WACC \;=\; \left[ \;\left( WOE \cdot COE \right) + \left( WOD \cdot COD \right) \;\right] \cdot \left( 1 - TR \right) \) |
| Symbol |
| \( WACC \) = weighted average cost of capital |
| \( COD \) = cost of debt |
| \( COE \) = cost of equity |
| \( TR \) = tax rate |
| \( WOD \) = weightage of debt |
| \( WOE \) = weightage of equity |
