What does weighted average cost of capital mean on the CPA exam?
Weighted average cost of capital. The blended after-tax cost of a company's debt and equity, weighted by how much of each it uses. The hurdle a project's return has to clear.
Which CPA exam sections use weighted average cost of capital?
Weighted average cost of capital appears in the BAR section of the CPA exam.
Other names for weighted average cost of capital
WACC
Related terms
- cost of goods sold: What the items actually sold cost to make or buy.
- capital structure: The mix of debt and equity funding the entity uses.
- treasury stock: A company's own shares reacquired and not retired.
- operating leverage: How much a company's profit moves for a given move in sales, driven by how much of its cost is fixed.
- other comprehensive income: Gains and losses that bypass net income and sit in equity until realized, such as unrealized gains on available-for-sale debt securities and foreign currency translation.