In general, a company’s WACC is typically considered to be the minimum required return that investors expect to receive for providing capital to the company. This formula calculates a weighted ...

Esty, Benjamin C., and E. Scott Mayfield. "The Weighted Average Cost of Capital (WACC): Derivation, Intuition, and Applications." Harvard Business School Technical Note 221-106, June 2021.

Conversely, a lower WACC signals relatively low financing cost and less risk. "The formula uses the cost of each of the sources of capital and weighs them relevant to the market value of the ...

The WACC discount formula is WACC = E/V × Ce × D/V × Cd × (1-T), where: The cost of capital and the discount rate work hand in hand to assess whether a prospective investment or project will ...

To discount cash flow properly, you first need to be familiar with how to calculate the smaller components of the formula. The most important of these is the weighted average cost of capital (WACC ...