Generator WACC

Units:	%
Mode:	Input Only
Multi-band:	False
Default Value:	10
Validation Rule:	≥0
Key Property:	No
Description:	Weighted average cost of capital

Generator WACC is the weighted-average cost of capital for the project.

WACC is used in combination with Economic Life in LT Plan to compute the stream of annuities equivalent to the defined Build Cost. If no WACC rate is set, the discount rate is used.

The weighted average cost of capital (WACC) is the rate that a company is expected to pay to finance its assets. WACC is the minimum return that a company must earn on its existing asset base to satisfy its creditors, owners, and other providers of capital. Companies raise money from a number of sources: common equity, preferred equity, straight debt, convertible debt, exchangeable debt, warrants, options, pension liabilities, executive stock options, governmental subsidies, and so on. Different securities are expected to generate different returns. WACC is calculated taking into account the relative weights of each component of the capital structure.

Note:

The annuity calculation is also affected by the settings End Effects Method, Depreciation Method, Tax Rate, and Inflation Rate.
An alternative to using WACC and Economic Life is to set the Levelized Capital Carrying Rate.
The Diagnostic Annuities prints the computed annuities to a diagnostic file
The treatment of annuities in the final period of LT Plan is controlled by the End Effects Method setting.