Explain the definition of WACC

Question

An investment bank computed my WACC. The report is as: “the definition of the WACC is defined as WACC = RF + βu (RM – RF); here RF being the risk-free rate and βu the unleveraged beta and RM the market risk rate.” It is differ from what we have seen within our class. Are they right?

Answer 1

No. This given formula is not the definition of WACC but it is of required return to the shares of the unlevered company (Ku).