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WACC Calculator

Calculate the Weighted Average Cost of Capital considering the cost and proportion of both equity and debt financing with tax shield.

Total market value of the company's equity (market cap)
Total market value of the company's interest-bearing debt
Required return on equity, often estimated via CAPM
Average interest rate on the company's debt
Marginal corporate tax rate (debt interest is tax-deductible)

Results

WACC0.00%
Equity Weight0.00%
Debt Weight0.00%
Total Capital$0

๐Ÿ“–What is it?

The Weighted Average Cost of Capital (WACC) represents the blended cost of all capital sources รขโ‚ฌโ€ equity and debt รขโ‚ฌโ€ weighted by their proportion in the company's capital structure. Debt receives a tax benefit because interest payments are tax-deductible. WACC = (E/V) รƒโ€” Re + (D/V) รƒโ€” Rd รƒโ€” (1 รขห†โ€™ T).

๐ŸŽฏHow to use

Enter the market values of equity and debt, the cost of equity (often from CAPM), the pre-tax cost of debt, and the corporate tax rate. The calculator computes the weights and the overall WACC.

๐Ÿ’กExample scenario

Equity = $800K, Debt = $200K, Re = 12%, Rd = 6%, Tax = 21%. Total capital = $1M. Equity weight = 80%, Debt weight = 20%. WACC = 0.80 รƒโ€” 12% + 0.20 รƒโ€” 6% รƒโ€” (1 รขห†โ€™ 0.21) = 9.6% + 0.948% = 10.55%.

๐Ÿ†Pro tip

WACC is the discount rate used in DCF (Discounted Cash Flow) analysis. Using an incorrect WACC can significantly over- or under-value a company. Always use market values, not book values, for the capital weights.