Thats WACC!
November 2019
Cash is not free; and a cash investment is not always cheaper than a loan.
The cost of money – known as the Weighted Average Cost of Capital (WACC) – tells you the cost of the cash that is currently in your bank account. The money in your bank account may have come from your company’s profits, but those profits came at a steep price. You may have spent money on marketing, operations, or overhead; some of the money you spent may have come from a loan, line of credit, an investor, or maybe even your personal savings. So, how do you know how much that cash costs?
