WACC Calculator – Weighted Average Cost of Capital

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Calculate the Weighted Average Cost of Capital (WACC) — the average rate a company pays to finance its assets, combining the cost of equity and cost of debt.

WACC: 8.33%

Note: WACC = (E/V) × Re + (D/V) × Rd × (1 − Tc). Used as a discount rate for investment decisions.

What is the Weighted Average Cost of Capital (WACC)?

The Weighted Average Cost of Capital (WACC) represents a company's average after-tax cost of capital from all sources, including equity and debt. It is the minimum return a company must earn on its existing asset base to satisfy its creditors, owners, and other capital providers.

WACC = (E/V) × Re + (D/V) × Rd × (1 − Tc)

Where:

  • E — market value of equity
  • D — market value of debt
  • V — total value (E + D)
  • Re — cost of equity
  • Rd — cost of debt
  • Tc — corporate tax rate

WACC is one of the most important financial metrics. It serves as the discount rate for discounted cash flow (DCF) analysis and is used to evaluate investment opportunities. A company creates value when the return on invested capital (ROIC) exceeds its WACC.

Typical WACC values range from 5% to 15%, depending on industry, company risk, and market conditions. Industries like utilities have lower WACC (4-6%) due to stable cash flows, while technology startups may have WACC above 15% due to higher risk.

How to Use This Calculator

  1. Enter Market Value of Equity: Input the total market capitalization of the company (stock price × shares outstanding).
  2. Enter Market Value of Debt: Input the total market value of the company’s outstanding debt.
  3. Enter Cost of Equity (%): Estimate using models like CAPM (Capital Asset Pricing Model), typically 8-15%.
  4. Enter Cost of Debt (%): The effective interest rate the company pays on its debt, typically 3-8%.
  5. Enter Corporate Tax Rate (%): The company’s effective tax rate, typically 15-35%.
  6. Calculate: Click “Calculate WACC” or press Enter to see the result.
  7. Reset: Use the “Reset” button to restore default values.
  8. Interpretation: WACC is expressed as a percentage. For example, if WACC = 8.33%, the company must earn at least 8.33% return on its investments to create value for shareholders.

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