Weighted Average Cost of Capital (WACC)
What’s it all about?
- What is the WAAC?
- How is the WACC calculated?
The weighted average cost of capital (WACC) represents the average capital costs of a company. It is derived from a weighted average of the equity costs and borrowing costs. The WACC functions as a meaningful instrument for company and risk assessment and also serves as a reference value for minimum returns from investment projects.
How is the WACC calculated?
The WACC is calculated using equity capital and liabilities to find a representative rate of interest that reflects the market. For the weighting of the WACC, METRO uses the equity capital and liabilities components that are valued at market prices.
WACC is a key figure that METRO lists in its annual report.