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Wtd Avg Cost of
Capital (WACC) Definition:
The weighted average cost of
capital is the cost associated with a firm's capital structure.
It's characterized by the following equation: More Details: Companies
are financed by a combination of debt and equity. They then
invest this money by putting it to use, whether it be in purchasing
inventory or buying new plants. There is a cost of using this
capital (money isn't free) so they try to earn returns in excess
of this cost. The cost is referred to as the weighted average
cost of capital (WACC).
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