Weighted average cost of capital (WACC) is the average aftertax cost of a company’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?
In capital budgeting, there are a number of different approaches that can be used to evaluate any given project, and each ... Read Full Answer >> 
What is the formula for calculating compound annual growth rate (CAGR) in Excel?
The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >> 
What is the formula for calculating weighted average cost of capital (WACC) in Excel?
When analyzing different financing options, companies need to look at how much it will cost to fund operations. There are ... Read Full Answer >> 
What is the difference between calledup share capital and paidup share capital?
The difference between calledup share capital and paidup share capital is investors have already paid in full for paidup ... Read Full Answer >> 
Why can additional paid in capital never have a negative balance?
The additional paidin capital figure on a company's balance sheet can never be negative because companies do not pay investors ... Read Full Answer >> 
When does the fixed charge coverage ratio suggest that a company should stop borrowing ...
Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>

Investing
Weighted Average Cost Of Capital (WACC)
Weighted average cost of capital may be hard to calculate, but it's a solid way to measure investment quality 
Investing
How To Calculate Minority Interest
Minority interest calculations require the use of minority shareholders’ percentage ownership of a subsidiary, after controlling interest is acquired. 
Mutual Funds & ETFs
ETF Analysis: WisdomTree SmallCap Earnings
Discover the WisdomTree Small Cap Earnings ETF, a fund with a special focus on smallcap and microcap stocks with positive earnings. 
Mutual Funds & ETFs
ETF Analysis: iShares US Regional Banks
Obtain information and analysis of the iShares US Regional Banks ETF for investors seeking particular exposure to regional bank stocks. 
Technical Indicators
Key Financial Ratios to Analyze the Mining Industry
Discover some the most important financial ratios used by investors and analysts to evaluate companies in the metals and mining industry. 
Technical Indicators
Key Financial Ratios to Analyze Retail Banks
Learn about key financial metrics that investors use to evaluate retail banks, and how the industry is fundamentally different from most other industries. 
Technical Indicators
Key Financial Ratios to Analyze Airline Companies
Examine some of the most important financial ratios and performance metrics investors use to evaluate companies in the airline industry. 
Stock Analysis
The 5 Biggest Canadian Oil Companies
Obtain information about some of the largest and most successful major integrated oil corporations that are headquartered in Canada. 
Technical Indicators
Key Financial Ratios to Analyze Tech Companies
Understand the technology industry and the companies that operate in it. Learn about the key financial ratios used to analyze tech companies. 
Stock Analysis
3 Reasons to Continue to Own Monster Beverage
Learn more about the Monster Beverage Corporation and some of the primary reasons why investors and market analysts like the stock.

Weighted Average Cost Of Capital  WACC
A calculation of a firm's cost of capital in which each category ... 
Internal Rate Of Return  IRR
A metric used in capital budgeting measuring the profitability ... 
IRR Rule
A measure for evaluating whether to proceed with a project or ... 
Profit Margin
A category of ratios measuring profitability calculated as net ... 
Quarter  Q1, Q2, Q3, Q4
A threemonth period on a financial calendar that acts as a basis ... 
Debt Ratio
A financial ratio that measures the extent of a company’s or ...