WACC Calculator (Weighted Average Cost of Capital)
Enter your company's equity and debt values, cost of equity, cost of debt and tax rate to calculate the Weighted Average Cost of Capital (WACC).
WACC Calculator (Weighted Average Cost of Capital)
Calculate a company's Weighted Average Cost of Capital (WACC), a key discount rate used in valuation and NPV analysis.
WACC blends the cost of equity and the after-tax cost of debt, weighted by each source's share of total capital, to produce a single rate representing a company's overall cost of financing.
Example
- With the default values shown above, this calculator returns: Total Capital (Equity + Debt) ≈ USD 1,000,000.00; Equity Weight ≈ 60.00; Debt Weight ≈ 40.00; After-Tax Cost of Debt ≈ 4.50; WACC ≈ 7.80.
Frequently Asked Questions
What is WACC used for?
WACC represents a company's blended cost of financing (equity and debt) and is commonly used as the discount rate in NPV and valuation models — a project should generally earn more than the WACC to add value.
Why is cost of debt adjusted for tax?
Interest payments on debt are typically tax-deductible, which lowers debt's effective cost. Multiplying by (1 − tax rate) reflects this 'tax shield'.