What is WACC - Weighted Average Cost of Capital

Weighted average cost of capital (WACC) is a way to measure the required rate of return of a company. Companies can use it to measure the profitability of a project. Investors can use it in something like discounted cash flow.
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[@ScoutyBoyO]

in the formula, the equity portion (at 3.25 min), do you mean R instead of D? You have r being the required rate of return. Great video.

[@LearntoInvest]

You're absolutely correct. I apologize for that. It should have been r not d. I said required rate of return, but for some reason, I put d

[@waltersalvatore2055]

instablaster...

[@Thomas-ow2bm]

how is that you can explain these things better than my old MBA profs? how is this possible? I mean seriously, a person drops a 100k on an mba and then finds better sources on youtube. wtf. edit: well done, keep it up, thank you

[@mehdiserghini6240]

i'm in the same case with the same feeling

[@MisterKelisi]

I agree

[@daredevil1189]

Yeah. Sad.

[@oliviat978]

My corporate finance lecturer for my master's didn't explain this even half as good as you did! thank you so much!

[@ngalawena]

This is better explained than my Harvard mba professors

[@cafiveohsrockbandremix9254]

I love that you're able to explain WACC better in a 6:30 video than my Intermediate Finance textbook can in 40+ pages. Thank you!

[@jacintafeng6787]

Perfectly explained, probably the best WACC explanation u can find on KZbin

[@giantsquidy3491]

Thank you so much. I am in an MBA program and came from a very non-math undergraduate field. This video made everything clear. Profs and finance textbooks can be obscure and cryptic to those not of the math persuasion.

[@mmiller7203]

I have read three sources on this subject when I should have just come watch your video.....thank you!

[@mahmuttumenbatur5632]

ı have been watching so many videos since yesterday to prepare myself for the exam, yours is the best one. simple, clear and to the point. well done and thank you

[@olivercooper7556]

It’s incredible how such a complex perceived formula (or at least for me) can be explained so elegantly, what an incredible video!

[@brilliant1863]

I don't understand how your videos don't have more views. Great explanation as always!

[@LearntoInvest]

Thanks!

[@levibowles5917]

You already got a sub from me. I can't tell you how long I was looking for someone to break this down exactly like you did. Thank you!

[@panagiotisanastasopoulos107]

Half a semester of finance course in ~7 minutes!! Great work!

[@nicoleluo6692]

This is the best best WACC explanation i have never seen! 👍

[@PPL_SFGCS]

Clear and conscience. Thanks for explaining the concept of WACC

[@ibrahimmosavi2168]

You explained way better than my finance professor. Thank you!

[@delickkanyesigye9938]

Finally I've found someone who has made more sense of this especially on the Real application of WACC. Wow

[@lukebarmakian3200]

I've been trying to learn DCF forever and this helped so much I know it's not actually about dcf but still thanks!

[@jadeling4025]

You are the best after I have been searching for this information online for 2 days and one night, seeing so many websites and google explanations. I especially like you telling me where can I find the average cost of debt.

[@herryfrd2740]

best explanation of WACC i've ever heard

[@sweettwiss1194]

My CFA length lecture is embarrassing compare to the info you give in one short video. Thank you so much!

[@SurajSharma-kl9vl]

you explained it way better than my acct prof did , thank you

[@printstudio9853]

woow..!!!...excellent piece of work bro...well done!!!

[@owend8956]

The best tutorial for finance period.

[@csjames69]

Easy to understand while doing my MBA studies. Thanks.

[@LearntoInvest]

I'm glad you liked it 😁

[@glee1669]

THANK YOU for this! I understand WACC in general and how to compute, but I was missing a clear reasoning of how it was applied back to whether a company should pursue a project of an expected return rate of x%. 🙏!

[@marceljoshuakannampuzha522]

I have my finance exam in week and this video was absolutely perfect for my learning, thank you very much. Very helpful and broke down a complex topic into its simplest form.

[@yash3714]

Same, where u from

[@yizhang6117]

best ever explanation on WACC

[@Springdaysbetter]

Your explanations were so clear and perfectly understandable Thank you so much😊

[@johnzarznia6814]

This is a great video! I use WACC sometimes but I often just default to PE because its easier to use. But i wan to get my skills up enough to confidently use WACC.

[@TA-wc8zz]

Way better than my professor. These professors complicate everything and spin it into some crazy concept.

[@sitijamilahnordin4487]

you explained better than my MOCA lecturer thank you so much bless you!!!!!!!!!!!!

[@aprilbrown9994]

I LOVE YOU!!! Thanks a million, it’s a damn shame my professor couldn’t break it down like this!!!!

[@donfrancis1246]

This video is so useful, I cannot thank you enough.

[@truenorth8996]

Than you so much. I struggled all evening trying to undesrtand wacc formula.. now its'clear

[@23longbong]

wow easier to understand than my 2-hour lecture, thank youu

[@Beancounter2014]

Thanks for the video. It breaks WACC down in a way that is very understandable.

[@Gar136]

Thank you for helping me prepare for my quiz :)

[@giulianonigro774]

Thank you for the video! It's really straightforward and useful to understand the meaning behind the wacc

[@itsmohdiii3689]

amazing video very educational helped me refresh my memory before an interview as a finance student thank you ... guys this is a no bs video amazingly helpfull you sir get my like and subscription

[@DrSam86]

Thank u man..u help me greatly with mba much more than the horrible univ. books.

[@kojo6402]

thanks so much. please teach more corporate finance related subjects NPV, APV, IRR, WACC, CAPM etc

[@LearntoInvest]

Good idea! I'll let you know when I do some more

[@JosueLopez-jx1th]

Very clearly explained - Thanks!

[@kawardt6784]

If my teacher could explain like you do. My teacher doesnt consider people that doesnt know a thing about finance. First time learning finance, new subject in my first sem, he just keeps talking and talking and I dont even know the terms he's using.

[@connertaherian5166]

Your videos are very well crafted, thanks!

[@jiveon007]

Brilliantly explained. Thank you.

[@connorgioiafigliu]

Really simple explanation, thank you!

[@knithindas]

Hey guys awesome work. Great work. Minimum visual effects made it better. Thanks

[@kevorod]

Love this video format!

[@jakobherold26]

Perfectly explained, thank you so much! Insane video!

[@emmy8133]

Clear explanation! Thanks for sharing.

[@nazimrahman]

wonderfully explained

[@vutony4282]

Very easy to understand. Thanks.

[@ozandogacerdem8450]

This is a great video I loved it. Thank you for sharing it. I learned a lot of information.

[@willfindjr]

Great video.. example used was very relevant and easy to understand. please keep the videos coming :-)

[@ChiChi-sw5iu]

Great explanation! Thank you for this!

[@pravinmakwana3039]

in the formula I make the debt portion of the equation 0.9% not 3% as shown. I think video is excellent though.

[@alishlalani2751]

Business finance final today, this really helped! Also you have a really good voice!

[@yash3714]

how did it go?

[@alishlalani2751]

I aced it!!

[@yash3714]

Congrats!! Can you help me with my business finance assessment i have?

[@cassiusbraganza4658]

Wow, Amazing video bro!

[@raishutalks8216]

Thank you Jimmy

[@pingislife2653]

J, thank you for this lesson! It was very useful in better understanding your other video on how to value a stock using DCF.

[@kaushiks87]

Great video. I just found an awesome channel for learning Finance Models!

[@brayaran7370]

Thank you for explaining this. This video is a JEWEL!

[@sandrajin915]

Super helpful! Thank you so much for this video!

[@LearntoInvest]

I like using WACC for discounted cash flow valuation. Do you use WACC or do you prefer a different method?

[@wazup3333]

How do you actually apply this with actual financial statements, finding the weight of debt and equity, and calculating the cost of debt when companies have many separate notes payable like convertible debentures that turn into equity..?

[@AlexOus]

Thanks for your efforts! Great content!

[@tinnguyen2219]

Thank you so much for sharing this useful data! Greatly appreciated.

[@properoldschool]

Thanks so much, you made this easier to understand.

[@willrogers7308]

brilliant video, thank you so much!

[@jahorasvictornaibaho7467]

Great explanatuon... I understood about the using WACC

[@its_me_human6448]

Super valuable video, you are amazing and life changer.

[@markmendis5951]

Hey, Could you please do a video on the how to find intrinsic value of a company per share basis.

[@LearntoInvest]

I got you covered kzbin.info/www/bejne/nJXClqCCgd99pM0 👍🙂

[@abuh9400]

Nice method on explaining, like it

[@SanderCords1]

This is a very clear video! Thnx!

[@LearntoInvest]

Thanks, I'm glad you like it!

[@ludiogot143]

Thank you for making it simple

[@toneraynger]

Hi Jimmy, Great video but could you clearly explain where the 7.9% that fell out of the sky came from... it was all going so well till then... thanks and good job

[@vinithashukla8637]

Today I am proud because I earned more than I traded, That's why I will be forever Thankful to BYSOS

[@SkaleFreaks]

Excellent video! thanks for sharing

[@SkylerJames]

Now that we seem to be headed into an inflationary environment, I put more WACC focus on my company analyses. Companies with lower costs of capital should be able to weather high inflation better due to their financial stability and theoretically more stable balance sheet.

[@barberuddin4928]

Perfectly explained!

[@tatendampwanyiwa5544]

thank you for video. it is very helpful.

[@patgreaney4730]

Please explain how to find the equity value in the WACC calculation. Is it the current market value of all stock in which case it is market capitalization ($/shr x no. of shrs), or is it the stockholders equity which can be found from the balance sheet? These are two very different numbers.

[@Ryan-wf7sh]

Great video jimmy, but one important question, where does a mere mortal find the information to input into the formula!?

[@filippoiguera3224]

Fantastic! Thank you

[@jagulba]

Awesome content man... learning so much from you Btw what are your favorite models to evaluate a fair price of businesses Do you have a video explaining which model should be used for what kind of business?

[@amrshahine950]

Thank you its very useful

[@andreeamorgociu2541]

This is awesome, thank you!

[@leabenn17]

Thank you. This will help for my exam

[@mominamus8762]

Great explaination👌👌 Can you explain what do you meant by discounting cash flows???

[@bob6168able]

Best of best. Thank you

[@nicolerodrigues8951]

Helpful video!! Question: do you have a video explaining HOW a company issues bonds or sells equity. Curious to know how they come to the conclusion to do one or the other.

[@radhakrishnavempati1391]

Thanks for the video. It sir really useful. But, I have a question, the WACC percentage value is a percentage of the companies market cap right? Hope to receive a reply soon! Thanks!

[@inspirationalquotesforyou]

if you be able to demonstrate where you get the number through the balance sheet, it would be great. By the way, this is the great video .Thank you

[@argupta15115]

Hi Jimmy, love your video on this topic. Can you also do another video explaining the cost of debt in more detail. You mentioned in the video that we can find the cost of debt in the footnotes of the financial statements, can you please give me an example of any company financial statement which has this so I can use that as a reference for my future evaluations.

[@Rajeshkumar-li2dn]

Excellent video 👍👍👍

[@chamindasilva3191]

Thanks Jimmy

[@alainat6444]

Thank-you!!!!!!!!!! I understand!

[@frosherman]

what a great video!!!

[@turboFalcon777]

Thank you Sir!

[@nathangalvez9642]

great video!

[@alexandervoronin5323]

Why the profit created by the company on top of equity and debt is not considered as 3rd part in the equation? For example our company generated enough money to repay it's debt and to pay considerable dividends to its shareholders, but still has considerable amount of cash left which basically belongs to the company itself, so the company now can invest into less profitable projects, just expecting to get slightly more than risk free rate, only to beat inflation, why not?