WAV is a container format for storing a record of a digitized audio stream without any compression. This format was developed by IBM and Microsoft in 1991 and was used in all versions of Windows. As the format uses audio streams without any compression, the files become very large in this format.
AC3 or Dolby AC-3 is a data format file where six audio channels are compressed by the AC3 codec, also known as Audio Codec 3. The AC3 format is used for the following audio formats - DVD, Blu-ray, cinemas and game consoles. To play the full surround sound of the AC3 file signal, you need a device that supports Dolby Digital technology.