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Weighted Average Cost of Capital (WACC)

Norwegian Communications Authority (Nkom) applies Weighted Average Cost of Capital (WACC) in the imposition of cost accounting, accounting separation and in the LRIC models.

The WACC is the opportunity cost of all capital invested in an enterprise. WACC is used in cost accounting and the accounting separation as an “accepted return on capital”. WACC is also used in Nkom’s LRIC models. In December 2013 Nkom made a decision on an updated cost of capital in the mobile market. The current cost of capital for the fixed network market was decided by Nkom in 2010. The cost of capital is determined on the basis of calculations made by Professor Thore Johnsen. The current decisions are only available in Norwegian.