Weighted Marginal Cost of Capital – WMCC – is the WACC applicable to the next dollar of the total new financing. Related to the concept is the break point concept. Weighted average cost of capital (WACC) may change over time due to changes in the volume of financing. This occurs as the volume of financing increases, the risk increases and providers of funds require higher return on the funds that they make available.
The WACC of the next dollar of the total financing may be different from the WACC of the last dollar of the total financing.
Related articles: Break Point, Weighted Average Cost of Capital (WACC)
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