> ## Documentation Index
> Fetch the complete documentation index at: https://valuation-101.com/docs/llms.txt
> Use this file to discover all available pages before exploring further.

# Cost of Capital

> WACC computation engine implementing Damodaran's three methods.

## Module: `lib/cost_of_capital.py`

Implements the three WACC computation methods from Damodaran's Cost of Capital worksheet.

## Key functions

### `wacc_detailed()`

Bottom-up WACC from first principles: unlevered beta → re-lever → CAPM → synthetic rating → cost of debt → weighted average.

### `wacc_industry()`

Looks up industry average cost of capital from Damodaran's reference dataset.

### `wacc_distribution()`

Returns the company's WACC percentile within its industry — useful for sanity-checking the detailed estimate.

### `synthetic_rating()`

Maps interest coverage ratio to a bond rating and default spread using Damodaran's synthetic rating table.

### `relever_beta()`

Re-levers an unlevered beta for a specific debt/equity ratio and tax rate.