[Verse 1]
When companies need money to grow and expand
They've got choices to make, got to take a stand
Borrow from banks or sell shares to the crowd
Each source of funding comes with a price allowed
[Chorus]
Cost of capital, what's the rate we pay
To fund our dreams and operations every day
Debt and equity, weighted average we need
Cost of capital guides every financial deed
[Verse 2]
Debt is cheaper 'cause interest we can deduct
But too much leverage leaves companies stuck
Equity's pricier, shareholders want their return
From dividends and growth, profits they earn
[Chorus]
Cost of capital, what's the rate we pay
To fund our dreams and operations every day
Debt and equity, weighted average we need
Cost of capital guides every financial deed
[Bridge]
Why do we calculate this magic number here
It helps us decide which projects are clear
If returns beat the cost, then we should invest
If not, say goodbye, put that plan to rest
[Verse 3]
WACC is the name, weighted average cost
Mix debt and equity, make sure nothing's lost
Multiply each weight by its respective rate
Add them together, now decisions await
[Chorus]
Cost of capital, what's the rate we pay
To fund our dreams and operations every day
Debt and equity, weighted average we need
Cost of capital guides every financial deed
[Outro]
Every project, every plan
Measured by this guiding hand
Cost of capital shows the way
For financial choices every day