The WACC is that the overall expected return the firm must earn on its existing assets to maintain its value if the firm is levered.
The average rate a company pays to finance its assets is known as the weighted average cost of capital (WACC).
It is determined by taking the average rate of all of the company's capital sources (debt and equity), weighted by the share of each component.
The average rate of return demanded by the investors who supply long-term funding is known as the cost of capital.
In other words, cost of capital is that the minimal rate of return a company must achieve on its investment to maintain its equity owners' market value.
Whereas WACC represents the anticipated average future costs of capital (from both debt and equity sources), IRR is an investment analysis tool that companies use to determine whether a project should be completed.
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