Weighted Average Cost of Capital — the blended after-tax cost of a firm's permanent capital, used as the discount rate for unlevered free cash flows in a DCF: WACC = r_d(1-t) · (D)/(V) + r_e · (E)/(V), where V = D + E. Weights are target capital-structure weights at market value; the debt term is tax-effected because interest is tax-deductible. In PE, WACC is used for DCF cross-checks of terminal value, not as the LBO model discount rate — the latter is the sponsor's target IRR on equity.