Use this WACC calculator to estimate a company weighted average cost of capital from equity weight, debt weight, cost of equity, pre-tax cost of debt, and corporate tax rate. The result shows the blended after-tax financing cost used to evaluate investments, valuation assumptions, hurdle rates, and capital structure decisions. Enter either market values or capital weights, then compare the output with related cost of debt, cost of equity, and valuation tools.
Formula
Where:
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E = Market value of equity
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D = Market value of debt
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V = E + D (total capital)
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Re = Cost of equity
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Rd = Cost of debt
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Tc = Corporate tax rate
Example
If:
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Cost of Equity (Re) = 10%
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Cost of Debt (Rd) = 5%
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Equity Weight = 60%
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Corporate Tax Rate = 25%
Then:
Related calculators and references
- Cluster hub: Financial Ratio Calculators hub.
- Related calculator: Cost of Debt Calculator.
- Related calculator: Cost of Equity Calculator.
- Related calculator: Enterprise Value Calculator.
- Related calculator: EV/EBITDA Multiple Calculator.
- Reference: WACC by Industry benchmarks.
- Reference: [WACC definition](./).
How to Use the WACC Calculator
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.
Frequently Asked Questions
These WACC FAQs explain the inputs, formula, after-tax debt adjustment, and how to interpret the result in finance models.
How does the WACC calculator help me?
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.
Which inputs do I need?
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%).
How is cost of equity (Re) estimated with CAPM?
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.
Can you show a worked example?
Example with equity weight 0.60, Re 10%, Rd 5%, Tc 25%: after-tax debt cost = 0.05 × (1 − 0.25) = 0.0375 (3.75%).
equity contribution = 0.60 × 0.10 = 0.06 (6%)
debt contribution = 0.40 × 0.0375 = 0.015 (1.5%)
WACC = 0.06 + 0.015 = 0.075 (7.5%).
What edge cases does the calculator handle?
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 not defined and flagged.
What is a good WACC value?
A lower WACC indicates cheaper capital and less financial risk. It varies by industry and market conditions.
Can you calculate WACC in Excel?
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).
What does 12% WACC mean?
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.
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.
Sources & Methodology