Weighted Average Cost of Capital (WACC) Calculator
Find your company’s Weighted Average Cost of Capital (WACC) based on equity, debt, and tax rate. Understand your cost of funding and optimize capital structure.
WACC Calculator
Compute Weighted Average Cost of Capital from equity/debt mix, cost of equity (direct or CAPM), cost of debt, and corporate tax rate.
Set equity share; debt is 100% minus equity.
%
$
$
Enter the expected return on equity as a percent.
%
%
%
%
%
Capital structure presets and CAPM-based equity cost examples.
Results
Weighted Average Cost of Capital (WACC)%
Equity Weight%
Debt Weight%
Cost of Equity (Re)%
After-tax Cost of Debt (Rd x (1 - Tc))%
Equity Contribution%
Debt Contribution%
Use this WACC calculator to estimate your company’s average cost of capital by combining equity and debt costs. It helps evaluate investment returns, project feasibility, and financial efficiency.
Follow these steps to calculate your company’s weighted average cost of capital and understand how equity, debt, and taxes affect overall financing costs.
Choose the weight input mode.
Select Weights (%) to enter equity and debt as percentages, or Amounts ($) to enter total dollar values. Make sure both values add up to 100% or the total capital.
Enter the equity weight.
Adjust the slider or input the percentage of financing funded by equity (e.g., 60%). The calculator automatically assigns the remainder to debt. Avoid exceeding 100% in total.
Select the cost of equity method.
Choose Direct % to enter a known rate manually, or CAPM to calculate it based on market return, risk-free rate, and beta. Use a realistic percentage such as 8–12%.
Input the cost of equity (Re).
Type the expected annual return on equity as a percent (e.g., 10%). Always use a plain number (e.g., enter 10, not 0.10).
Enter the cost of debt (Rd).
Type the average interest rate paid on company debt (e.g., 5%). Ensure this reflects current borrowing rates before taxes.
Add the corporate tax rate (Tc).
Input your firm’s effective tax rate (e.g., 25%). This reduces the after-tax cost of debt, which lowers the WACC.
Review the results.
The calculator displays WACC, equity and debt weights, after-tax cost of debt, and contributions to overall cost. Use these to compare financing scenarios.
Tip:Enter all percentages as whole numbers (e.g., 7.5 for 7.5%) to avoid incorrect results.
Frequently Asked Questions
The calculator computes the weighted average cost of capital: the blended rate a firm pays for financing. Plain-text formula: WACC = (E/V)*Re + (D/V)Rd(1 - Tc), where E and D are market values of equity and debt, V = E + D, Re is cost of equity, Rd is pre-tax cost of debt, and Tc is the corporate tax rate.
Equity weight or amounts (E and D), cost of equity (Re), cost of debt (Rd), and corporate tax rate (Tc). If you enter amounts, weights are computed as E/V and D/V with V = E + D. If you enter weights directly, they must sum to 1 (or 100%).
Plain-text CAPM: Re = Rf + beta*(Rm - Rf), where Rf is the risk-free rate, beta is the asset’s systematic risk, and (Rm - Rf) is the equity risk premium.
If E = 0 or D = 0 it returns the remaining component after tax (pure equity or pure debt). Tc is constrained to [0,1]. Weights are normalized from amounts when V > 0; if V = 0 or any input is missing/invalid, the result is undefined and flagged.
A lower WACC indicates cheaper capital and less financial risk. It varies by industry and market conditions.
Yes. With E in B2, D in B3, Re in B4, Rd in B5, Tc in B6: =(B2/(B2+B3))*B4 + (B3/(B2+B3))*B5*(1-B6) Ensure E and D are market values and Re/Rd/Tc are decimals (e.g., 0.10, 0.06, 0.21).
It’s the firm’s average required return (hurdle rate). A project must earn above 12% (its IRR > 12%) to add value. Use 12% as the discount rate when valuing nominal cash flows for an asset with risk similar to the firm’s core operations.
Methodology & Sources
The tool computes WACC as WACC = (E/V)Re + (D/V)Rd(1 - Tc) using market-value weights (preferred in capital-structure theory). When “amounts” are entered, weights are normalized by V = E + D; otherwise, provided weights are used after checking they sum to 1 within a small tolerance. Cost of equity may be entered directly or via CAPM using the plain-text equation Re = Rf + beta(Rm - Rf). The tax shield is applied only to Rd through (1 - Tc) consistent with the classic treatment of corporate taxes. Displayed percentages are rounded using round-half-even to two decimal places; intermediate steps keep higher precision to minimize rounding drift. Units follow SI/ISO conventions for dimensionless quantities (percent shown as %). This implementation reflects the standard corporate-finance formulation rooted in Modigliani–Miller with taxes and the CAPM for Re.
Bibliography
Franco Modigliani; Merton H. Miller
(1963).Corporate Income Taxes and the Cost of Capital: A Correction — American Economic Review
https://www.jstor.org/stable/1809167
We use cookies to enhance your browsing experience, serve personalized content, and analyze our traffic. By clicking "Accept All", you consent to our use of cookies.
Privacy Policy
Necessary cookies are required for the website to function properly. These cookies ensure basic functionalities and security features of the website.
Analytics cookies help us understand how visitors interact with our website by collecting and reporting information anonymously.
Marketing cookies are used to track visitors across websites to display relevant and engaging advertisements.
Preference cookies enable the website to remember information that changes the way the website behaves or looks.
