Weighted Average Cost of Capital (WACC)
The overall rate of return desired by all investors (stock and bond) in a company:
WACC = [K
e
+ K
d
(D/E)] / [1 + D/E]
where the terms in the formula are defined in this WACC-a-tron:
K
e
(desired return on equity):
%
K
d
(desired return on debt):
%
D/E (debt-to-equity ratio):
W.A.C.C.:
%
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