Home > Glossary > Weighted Average Cost Of Capital
Meaning / Definition of
Weighted Average Cost Of Capital
Categories: Strategies,
the average cost of a company's financing (equity, debentures, bank loans) weighted according to the proportion each element bears to the total pool of capital. Weighting is usually based on market valuations, current yields, and costs after tax. The weighted average cost of capital is often used as the hurdle rate for investment decisions, and as the measure to be minimized in order to find the optimal capital structure for the company.
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