In finance, we know to use “r” as the appropriate rate to discount cashflows to account for risk and the time value of money. This “r” is also known as the cost of capital, opportunity cost, discount rate, interest rate, required rate of return, market rate, or the yield to maturity. But where does this “r” come from?
Learn about what WACC (the weighted average cost of capital) is, how its components can be calculated, and how it can be used to discount cashflows.