Finance and accounting
WACC calculator (weighted average cost of capital)
Weighted average cost of capital from equity, debt and optional preferred stock, with after-tax debt cost and an optional CAPM cost of equity.
Runs in your browser. What you enter stays on this page and is not uploaded.
Used only when preferred stock is above zero.
Result
Method and limits
WACC weights each source of capital’s required return by its share of total market value. Interest is tax-deductible, so debt enters after tax.
WACC = E/V × Re + D/V × Rd × (1 − T) + P/V × Rp, V = E + D + P
CAPM: Re = risk-free rate + beta × market risk premiumAssumptions and limits
- Market values and the current capital structure are assumed to persist.
- The inputs, especially the cost of equity, are estimates; small changes move valuations a lot.
- An educational calculation, not financial, tax, legal or investment advice.
Worked example
Equity 600,000 at 12% and debt 400,000 at 6% with 25% tax give WACC = 0.6 × 12% + 0.4 × 6% × 0.75 = 9.00%. With CAPM, a 4% risk-free rate, beta 1.2 and a 5.5% premium give a 10.6% cost of equity.
References
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