Weighted average cost of capital (WACC) is the average aftertax cost of a companyâ€™s various capital sources, including common stock, preferred stock, bonds and any other longterm debt. By taking the weighted average, the WACC shows how much interest the company pays for every dollar it finances.
The internal rate of return (IRR), on the other hand, is the discount rate used in capital budgeting that makes the net present value (NPV) of all cash flows (both inflow and outflow) from a particular project equal to zero. It is used by companies to compare and decide between capital projects. For example, a company may evaluate an investment in a new plant versus expanding an existing plant based on the IRR of each project.
The primary difference between WACC and IRR is that where WACC is the expected average future costs of funds (from both debt and equity sources), IRR is an investment analysis technique used by companies to decide if a project should be undertaken. A close relationship exists between WACC and IRR, however, because together these concepts make up the decision for IRR calculations. In general, the IRR method indicates that a project whose IRR is greater than or equal to the firm's cost of capital should be accepted, and a project whose IRR is less than the firm's cost of capital should be rejected.

How do you calculate IRR in Excel?
Understand how to calculate the internal rate of return (IRR) in Excel and how it's used to determine anticipated yield per ... Read Answer >> 
Which is a better measure for capital budgeting, IRR or NPV?
All other things being equal, using IRR and NPV measurements to evaluate projects often results in the same findings. However, ... Read Answer >> 
How do I use Excel to get discount rate over time?
Learn how to calculate discount rate in Microsoft Excel and how to find the discount factor over a specified number of years. Read Answer >> 
Why is the Modified Internal Rate Of Return (MIRR) preferable to the regular internal ...
See why the modified internal rate of return is often a superior metric to the classic internal rate of return for assessing ... Read Answer >> 
What does a high weighted average cost of capital (WACC) signify?
Find out what it means for a company to have a relatively high weighted average cost of capital, or WACC, and why this is ... Read Answer >>

Investing
Internal Rate of Return: An Inside Look
Use this method to choose which project or investment is right for you. 
Investing
Return on Investment (ROI) Vs. Internal Rate of Return (IRR)
Read about the similarities and differences between an investment's internal rate of return (IRR) and its return on investment (ROI). 
Small Business
Calculating the Internal Rate of Return Using Excel
The internal rate of return on investments is explained and illustrated in different investment scenarios. 
Investing
Internal Rate of Return Formula for Excel
The internal rate of return, or IRR, is a popular metric businesses use to measure a projectâ€™s return on investment. 
Small Business
Capital Budgeting: Which is Better, IRR or NPV?
Using internal rate of return and net present value for capital budgeting evaluations often end in the same result. But there are times when using NPV to discount cash flows makes more sense. 
Financial Advisor
Understanding Internal Rate Of Return
Internal rate of return, or IRR, is one of the most popular methods of evaluating potential projects. Learn more about this important metric. 
Investing
Private Equity on Steroids: How Debt Fuels Outsized Returns
Hot Air: Many private equity firms use a legal technique that can boost returns by 25% or more, Bloomberg says 
Investing
Investors Need A Good WACC
Weighted average cost of capital may be hard to calculate, but it's a solid way to measure investment quality. 
Financial Advisor
How to Compare Permanent Life Insurance Policies
How you can use the internal rate of return to compare and purchase a permanent life insurance policy.

Internal Rate Of Return  IRR
A metric used in capital budgeting measuring the profitability ... 
The Net Internal Rate Of Return  Net IRR
A measure of a portfolio or fund's performance that is equal ... 
Modified Internal Rate Of Return  MIRR
While the internal rate of return (IRR) assumes the cash flows ... 
Weighted Average Cost Of Capital  WACC
Weighted average cost of capital (WACC) is a calculation of a ... 
Net Present Value  NPV
Net Present Value (NPV) is the difference between the present ... 
Economic Spread
1. A performance metric that is equal to the difference between ...