Home / Glossary / WACC (Weighted Average Cost of Capital)
FinanceWACC (Weighted Average Cost of Capital)
Blended after-tax cost of a firm’s equity and debt.
WACC weights the cost of equity and the after-tax cost of debt by their market values. It is the standard discount rate for valuing a whole firm, because it reflects the return all capital providers require.
Formula / theory
WACC = (E/V)·R_e + (D/V)·R_d·(1 − T_c)
In Python
wacc = (E/V)*re + (D/V)*rd*(1 - tax)