Locating WACC

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Some of the information in this post may be out of date. Please speak to a librarian for more up to date information. 

The weighted average cost of capital, or WACC, is defined by Investopedia as…”a calculation of a firm’s cost of capital in which each category of capital is proportionately weighted”.  Capital meaning a firm’s total stocks, bonds, and long-term debt.  The Investopia entry also contains the formula for figuring a firm’s WACC.  (Bloomberg also provides WACC for individual firms).

An industry WACC is often sought in the process of valuation of a company, and the common source for locating industry WACC is the Cost of Capital Yearbook by Ibbotson (Bryant, on order).   This unique source provides the cost of equity and the weighted average cost of capital for industries arranged by SIC industry code.   If you don’t have access to this Ibbotson source, try looking at Damodaran Online , a site developed by Professor Aswath Damodaran, Professor of Finance and David Margolis Teaching Fellow at the Stern School of Business at New York University.  Professor Damodaran has developed a Cost of Capital by Sector page (dated Jan. 2009) using Value Line data.  After viewing Professor Damodaran’s page you might want to take a look at some of his many books, such as Applied Corporate Finance, Damodaran on Valuation, Investment Valuation, or his new book, Strategic Risk Taking: a Framework for Risk Management  (on order).

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