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WACC Calculator

278 words Calculator
Market Value of Equity ($)
Market Value of Debt ($)
Cost of Equity (%)
Cost of Debt (%)
Corporate Tax Rate (%)

Results

Weight of Equity:71.4%
Weight of Debt:28.6%
WACC:7.02%

Capital Structure

Equity 71.4%
Debt 28.6%

Calculate Weighted Average Cost of Capital (WACC) with this financial tool. Input equity/debt values and costs to determine your company’s capital hurdle rate.

WACC Calculator: Complete Financial Guide

Description

The WACC Calculator helps businesses determine their Weighted Average Cost of Capital - the blended rate a company pays for its capital. Essential for investment decisions and financial analysis.

What Is It?

This financial tool calculates the minimum return a company must earn to satisfy its investors by:

  • Combining debt and equity costs
  • Accounting for tax benefits of debt
  • Visualizing capital structure
  • Providing actionable financial insights

Key Formula

WACC = (E/V × Re) + (D/V × Rd × (1 - Tc))
Where:

  • E = Market value of equity
  • D = Market value of debt
  • V = Total capital (E + D)
  • Re = Cost of equity
  • Rd = Cost of debt
  • Tc = Corporate tax rate

Source: Corporate Finance Institute (CFI) standards

How to Use

  1. Enter capital values (equity & debt in USD)
  2. Input cost rates (as percentages):
    • Cost of equity (CAPM or DDM result)
    • Pre-tax cost of debt
    • Current corporate tax rate
  3. View instant results:
    • Capital structure breakdown
    • After-tax WACC percentage
    • Interactive visualization

Key Terms

  • Cost of Equity: Return expected by shareholders
  • Cost of Debt: Interest rate paid on borrowings
  • Capital Structure: Debt/equity mix in a company
  • Tax Shield: Debt’s tax-deductible interest benefit

FAQs

Q: Why is WACC important?
A: It’s the hurdle rate for investments - projects must return more than WACC to create value.

Q: Should I use book or market values?
A: Always use market values for accurate WACC calculation.

Q: How often should I recalculate?
A: Quarterly during financial reporting, or when capital structure changes.

Pro Tips

  • Compare: Benchmark against industry averages
  • Sensitivity: Test different capital structure scenarios
  • Currency: Use consistent currency for all inputs
  • Precision: Source rates from recent financial statements

Disclaimer

This tool provides estimates only. Consult financial professionals for official valuations. Rates may vary by market conditions (2025 data).

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