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What is(are) the main driver(s) of variation of WACC?

What is(are) the main driver(s) of variation of WACC?

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WACC is called weighted average cost of capital and it is sum of multiplication of weights of source with component cost of all the components of capital strucutre. There are various variables thats affect the WACC or can lead to variations in WACC. One of the important variable is change in propotion of component of capital structure. Another variable that can change in the WACC is market price of the securities which not only change the weight of component of capital structure but also affects the cost of components like cost of equity, cost of preferred stock, cost of debt etc.

Market interest rate, change in tax rates, inflation rate and risk are some of the factors that lead to change in WACC.

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