1, WACC (weighted average cost of capital).
2.WACC represents the company's overall average cost of capital, which can be used to measure whether a project is worth investing; The return of this project must not be lower than WACC.
3. When calculating WACC, first calculate the capital cost or required rate of return of each item that constitutes the company's capital structure, such as common stock, preferred stock, corporate bonds and other long-term liabilities, and then weight these rates of return according to the weight of each item in the capital structure to calculate the weighted average cost of capital.
4.WACC (weighted average cost) is widely used in asset and enterprise evaluation, and its method of combining CAPM (asset evaluation model) to calculate asset opportunity cost and evaluate enterprise value is widely used in academia and practice.