WACC: what is the cost of capital really for?
A practical explanation of WACC, debt, equity and investment decisions without over-theorising the model.
Expert note: This article was written by our chartered accountancy firm. Information is current as of 2026. For a personalised review of your situation, contact us.
WACC: what is the cost of capital really for?
Updated March 2026 - WACC estimates the blended cost of debt and equity. Its value lies in helping decisions, not in pretending to deliver false precision.
See also Capex for SMEs, financial performance and funding plan.
Main use cases
- ▸investment appraisal;
- ▸valuation;
- ▸financing scenario comparison.
CTA : Link your investment choices to cost of capital logic
Conclusion
WACC is useful when it supports judgement instead of replacing it.
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Article written by Samuel HAYOT
Chartered Accountant, registered with the Institute of Chartered Accountants.
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