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Definition of Weighted Average Cost of Capital, WACC - Finance dictionary
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Weighted Average Cost of Capital, WACC (See Chapters 30,32 and 33 of the Vernimmen)
Weighted average cost of Capital is the Rate of return required by the providers of funds (shareholders and creditors) to finance the company's Investment projects. Weighted average cost of Capital is the overall cost of financing of a company. According to the theory of markets in equilibrium, and provided there are no tax distortions, this cost is independent of the Capital structure of the company; hence, Optimal Capital structure does not exist. Weighted average cost of Capital can be also called Cost of capital.
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