The weighted average cost of capital (WACC) is a financial metric used to calculate the average cost of capital, taking into account the proportional weights of a company's debt and equity components in its capital structure. WACC represents the blended cost of financing for a company's investments and projects, incorporating the cost of debt, cost of equity, and cost of preferred stock, weighted by their respective market values or proportions in the company's capital mix. WACC serves as a discount rate or hurdle rate used in discounted cash flow (DCF) analysis, capital budgeting, and investment appraisal to evaluate the feasibility and profitability of potential investments or projects. A company's WACC reflects the minimum return required by investors to compensate for the risk of investing in the company's securities and the opportunity cost of capital, considering prevailing market conditions, interest rates, tax rates, and risk premiums. By discounting future cash flows at the WACC, companies can determine the net present value (NPV) of investments, assess their financial viability, and make informed capital allocation decisions to maximize shareholder value and achieve long-term financial objectives.