What is the Difference Between Cost of Capital and Weighted Average Cost of Capital?

Cost of Capital
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CARMEN DUARTES
Accountant, Colombia
🔥NEW Hello, could you please answer me: What is the difference between the cost of capital and the weighted average cost of capital? (...) Read more? Sign up for free

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Difference Between Cost of Capital and WACC

Cost of capital is the total of cost of debt and cost of equity. WACC (in full: Weighted Average Cost of Capital) is the weighted average of these costs derived as a proportion of debt and equity held in the firm.
Both, Cost of capital and WACC, are made use in important financial decisions, which include merger and acquisition decisions, investment decisions, capital budgeting, and for evaluating a company's financial performance and stability.
WACC is calculated by giving weights to the company's debt and capital in proportion to the amount in which each is held.

 

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