The Weighted Average Cost of Capital (WACC) is a financial metric that calculates a company's average cost of capital from all sources, including equity and debt. It reflects the expected return that investors require for providing capital to the company. WACC is important for assessing investment opportunities and determining the minimum return a company must earn to satisfy its investors. To compute WACC, the costs of equity and debt are weighted according to their proportion in the company's capital structure. The formula incorporates the cost of equity, which can be estimated using models like the Capital Asset Pricing Model (CAPM), and the after-tax cost of debt, providing a comprehensive view of a company's financial health.