What it is
WACC (Weighted Average Cost of Capital) is the blended return a project needs to clear to be worth financing — a mix of the cost of debt (loan interest) and the cost of equity (investor return expectation), weighted by how much of each funds the project. It is expressed as a % and used as the discount rate in the NPV calculation, and as the hurdle rate IRR is screened against.
Where the default comes from
RevenueIQ pre-fills WACC with a country-indicative benchmark (mature European markets trend lower, emerging/higher-risk grid markets trend higher) so a first screening run never starts from zero. This default appears next to the field and in the "NPV @ x% WACC" result until you edit it.
How it drives the numbers
- NPV — future revenue and OPEX are discounted back to today's value at the WACC rate. A higher WACC lowers NPV for the same cash flows.
- IRR viability — the viability verdict compares the modelled IRR against WACC (and a market hurdle band) — IRR below WACC signals the project doesn't clear its own cost of capital.
- Simple payback — undiscounted; uses profit (revenue − OPEX), not gross revenue. WACC does not affect payback — only IRR and NPV.
When to override it
Use your own WACC when you already have indicative debt terms, a target investor IRR, or a portfolio hurdle rate — enter it in Assumptions (editable) and re-run. This is a sensitivity input, not a substitute for a lender's or investor's own cost-of-capital assessment.