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.

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 you use internal rate of return to calculate a capital budget?
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What is the formula for calculating the internal rate of return (IRR)?
Learn about the internal rate of return, an important concept in determining the relative attractiveness of different investments. 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 >> 
How much debt is too much when calculating capital budgeting?
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How do you use discounted cash flow to calculate a capital budget?
Learn how discounted cash flows are used in creating capital budgets as a part of the net present value and internal rate ... Read Answer >>

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The Net Internal Rate Of Return  Net IRR
A measure of a portfolio or fund's performance that is equal ... 
IRR
The currency abbreviation or currency symbol for the Iranian ... 
Pooled Internal Rate Of Return  PIRR
A method of calculating the overall internal rate of return (IRR) ... 
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 ... 
Annuity Method Of Depreciation
A method of depreciation centered around cost recovery and a ...