Calculating the weighted cost of capital (WACC) is a crucial step in determining the financial feasibility of a business or project. It is a complex calculation that takes into account the cost of each type of capital a company uses, including debt and equity, and the proportion of each type of capital in the company's financing structure. WACC is used as a discount rate to calculate the net present value of a business or project, and it is essential for making informed investment decisions.

To calculate WACC, one must first determine the proportion of each type of capital in the company's financing structure. This includes the cost of equity, which is the return expected by investors, and the cost of debt, which is the interest rate paid by the company on its outstanding debt. The cost of debt is adjusted for taxes since interest payments are tax-deductible. The proportion of each type of capital is then multiplied by its respective cost, and the sum of these products gives the company's WACC.