Weighted Average Cost of Capital (WACC) calculates a firm's cost of capital in which each category of capital is proportionately weighted. These costs vary depending on the risk level of the firm. The higher the cost of capital, the higher the risk. The company should generate earnings higher than the cost of capital to pay its creditors and stockholders. WACC indicates the minimum return a company should make to satisfy its creditors and stakeholders. It's called a weighted average because it gives more weight or importance to either borrowed capital or investors' money, whichever is greater. These templates provide for the calculation of WACC, get yours now!