What is another name for the cost of capital?

The term "cost of capital" refers to the minimum return that a company must earn on its investment projects to satisfy its creditors, equity investors, and other capital providers. The "weighted average cost of capital" (WACC) is a key financial metric that represents the average rate of return a company is expected to pay to finance its assets, accounting for the proportionate weight of each component of capital (debt and equity).

WACC is calculated by taking the cost of each type of capital (equity and debt), multiplying it by its respective weight in the total capital structure, and summing those values. This measure is crucial in investment decisions; it acts as a hurdle rate that projects must exceed for a company to create value. If a project's return exceeds the WACC, it likely enhances shareholder value.

While other provided options touch upon aspects related to financing, only the weighted average cost of capital specifically encapsulates the comprehensive cost of all sources of financing, thereby making it synonymous with the cost of capital.