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| | | | 1. | WACC | (Weighted Average Cost of Capital) A method to measure firm's cost of capital. Corporations raise money from two main sources: equity and debt. Thus the capital structure of a firm comprises two main components: equity and debt. The WACC takes into account the relative weights of each component of the capital structure and presents the expected cost of new capital for a firm. The formula for calculating WACC is as follows: (Total Equity Total Capital cost of equity) (Total Debt | |
