WACC Calculator

Weighted Average Cost of Capital (WACC) is the rate that a firm is expected to pay on average to all its different investors and creditors to finance its assets. You can use this WACC Calculator to calculate the weighted average cost of capital based on the cost of equity and the after-tax cost of debt.

Enter the information in the form below and click the "Calculate WACC" button to determine the weighted average cost of capital for a company.

WACC Formula

The calculator uses the following basic formula to calculate the weighted average cost of capital:

WACC = (E / V) × R_e + (D / V) × R_d × (1 − T_c)

Where:

WACC  is the weighted average cost of capital,

R_e  is the cost of equity,

R_d  is the cost of debt,

E  is the market value of the company's equity,

D  is the market value of the company's debt,

V = E + D  is the total market value of the company's financing (equity and debt),

E/V  is the percentage of equity financing,

D/V  is the percentage of debt financing,

T_c  is the corporate tax rate.

Example: Suppose we have the following information about a firm:

• Debt (D) = $5,000
• Equity (E) = $15,000
• R_d = 8%
• R_e = 13.5%
• Corporate Tax Rate (T_c) = 20%

In this example, the WACC would be calculated as follows:

WACC = (E / V) × R_e + (D / V) × R_d × (1 − T_c)

WACC = [(15000 / 15000 + 5000) × 0.135] + [(5000 / 15000 + 5000) × 0.08 × (1 − 0.2)]

WACC = 0.10125 + 0.016 = 0.11725 or 11.725%, the WACC for this firm is 11.725%

You may also be interested in our Economic Order Quantity (EOQ) Calculator