The Weighted Average Cost of Capital (WACC) represents a company's blended cost of capital across all sources, including equity, debt, and preferred stock. It is the average rate a company expects to pay to finance its assets. The WACC is a critical metric used in financial modeling, valuation, and investment decisions. For instance, a company will often use its WACC as the discount rate for the cash flows of a potential project. If the project's expected return is higher than the WACC, it is considered a worthwhile investment.