---
id: "prereq-wacc"
type: "prereq"
source_timestamps: ["\\\"§ So Long", "Cheap Capital\\\""]
tags: ["finance"]
related: ["concept-end-of-cheap-capital", "claim-wacc-historical-norms"]
reason: "Required to understand the financial threshold that dictates whether a company's growth strategies are actually creating or destroying value."
sources: ["reskilling"]
sourceVaultSlug: "hbr-seg-reskilling"
originDay: 10
articleStem: "hbr-sig-49-ai-squeezing-middle-managers"
sourceUrl: "https://hbr.org/2026/06/ai-is-squeezing-middle-managers"
sourceTitle: "AI Is Squeezing Middle Managers"
---
# Weighted Average Cost of Capital (WACC)

**Why you need this.** An understanding of WACC is necessary to grasp why a return to 'high single digits' fundamentally alters corporate strategy.

**Definition.** WACC represents the **minimum return a company must earn** on its existing asset base to satisfy its creditors, owners, and other providers of capital — the *hurdle rate* against which investment discipline is measured.

**Why it matters here.** Required to understand the financial threshold that dictates whether a company's growth strategies are actually **creating or destroying value**. When WACC rises (see [[claim-wacc-historical-norms]] and [[concept-end-of-cheap-capital]]), projects that cleared a low hurdle no longer do — which is the whole basis of [[concept-value-based-management]] and [[claim-growth-over-returns-fails]]. The enrichment overlay confirms the source uses WACC correctly as the hurdle rate, while flagging the specific forecasted *level* as unverified.

Related: [[concept-end-of-cheap-capital]] · [[claim-wacc-historical-norms]] · [[concept-value-based-management]]