So we've calculated the cost of our equity using the dividend growth model or cap M. What we have to consider though is that we have cost of equity and we also have cost of debt. That is, we, as an organization might owe someone else money. In trying to identify our internal hurdle rate, our internal rate of return has to be a function of both what can a return we get by owing ourselves but also, what do we owe other people for lending us money. The way to balance this is a technique called the weighted average cost of capital, sometimes called WACC. The weighted average cost of capital is literally a weighted average. Not too dissimilar for perhaps, how you were graded in finance or Econ 101 in college. And that is your final exam may have had a higher weight than homework assignments or other kinds of deliverables or your final presentation is 30% and your midterm exam is 20%. Using the weights of each of this will give you your final grade. We do the same thing with the WACC. We weight the customer equity and we weight the cost of our capital to arrive in an average interest rate, an average hurdle rate that our company sees going forward. Let's do that calculation now. The calculation for WACC is literally the weighted average of two interest rates. The first is interest rate on debt. What is it costing us to carry debt? And the second is the weighted cost of our equity. The calculation of WACC is literally this long beast here, where rD stands for the interest rate, the cost of our debt. 1- T or 1- Tc is 1 minus the marginal touch rate facing our company. D is the total value of our debt, relative to V, the firm's total value. Now V is the sum of our debt plus our equity. Now rE, that's the return or the interest rate on our Equity. We've already calculated that, we can use Cap M or even our dividend growth model. So it actually calculated rE. And then E is the equity value of our company and V again is the total value. So now, if you look at this, the weights D to V relative to E to V tells us how much debt are we carrying relative to our equity and our V is the sum of D and E. So we've got our first weight is D and our second weight is E. Our interest rates rD and rE are calculated as what it's costing us to either borrow money or one is costing us to invest in our own stock. And our tax rate is essentially what are we paying marginally in taxes. What do we need to calculate this? From our income statement, you're going to need interest expenses to help you calculate the rate of return or the cost of your debt. You're going to need to know your income before your taxes and your income tax expense to calculate your marginal tax rate. From your balance sheet, you're going to need your short and long-term debt. And then from your key stats, you have to identify what's called your market capitalization. Market capitalization is the price of your stock times the total number of shares of the stock that are outstanding, and you also need to know your beta to calculate your cap M.