WACC= the weighted average cost of capital (cost of capital=cost of equity and debt) (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. It is a combination of cost of equity and after-tax cost of debt. So about cost of equity, the equity holders' required rate of return is a cost, because if the company does not deliver this expected return, shareholders will simply sell their shares, causing the price to drop. Therefore, the cost of equity is basically what it costs the company to maintain a share price that is satisfactory (at least in theory) to investors. Cost of equity can be calculated by capital asset pricing model= Risk-free rate+ Beta * risk premium (Rm-Rf) –(risk premium is simply the return investors expect above the risk free rate, to compensate them for taking risk by investing in stocks). The net cost of the debt is actually the interest paid less the tax savings resulting from the tax-deductible interest payment. So, the after-tax cost of debt is interest rate company should pay on its debt* (1 - corporate tax rate). WACC is the weighted average of these 2 costs.