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BUILDING INTUITION A FIRM's COST OF CAPITAL IS A WEIGHTED AVERAGE OF ALL OF ITS FINANCING COSTS

The cost of capital for a firm is a weighted average of the costs of the different types of financing used by a firm. The weights are the proportions of the total firm value represented by the different types of financing. By weighting the costs of the individual financing types in this way, we obtain the overall average opportunity cost of each dollar invested in the firm.

From

Cover of Fundamentals of Corporate Finance, Second Edition

Note

why calc WACC- OPP COST