The Weighted Average Cost of Capital is
your market based cost of debt and cost of equity weighted by the porportion
of your debt to equity. It is expressed as an interest rate.
 Calculate
it by multiplying
the proportion of your debt times your current interest rate on debt
and the proportion of equity times the return expected
by the market. For example:
(.25 X 9% cost of debt) + (.75 X 15% cost of equity)
= 13.5%
Ibbotson Associates calculates
these values for over 300 industries and Prof.
Damadoran has similar data at his NYU site.
Competitive forces eventually reduce the premium people will pay to buy your stock and could increase your cost to borrow funds. Understanding how your firm's industry is reacting to competition is just as important as doing the math I describe here and is why advice from an experience facilitator or operator is critical to put the math in context.
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