Weighted Average Cost of Equity (WACE)

Weighted average cost of equity (WACE) is a way to calculate the cost of a company’s equity that gives different weight to different aspects of the equities. Instead of lumping retained earnings, common stock, and preferred stock together, WACE provides a more accurate idea of a company’s total cost of equity. Determining an accurate cost of equity for a firm is integral for the firm to be able to calculate its cost of capital.