👉 Henderson Math, also known as the Henderson Rule or Henderson's Formula, is a method used in finance to calculate the weighted average cost of capital (WACC) for companies with multiple sources of financing, such as debt and equity. It takes into account the proportion of each financing source relative to the company's overall capital structure, along with their respective costs (interest rates for debt and required returns for equity). The formula combines these elements to provide a more accurate representation of the average rate a company should use to finance its operations, helping in making informed decisions about capital structure. This method is particularly useful for assessing the financial health and valuation of a company, as it reflects the true cost of capital based on its current financial mix.
