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Add the market value of equity and the market value of interest-bearing debt.
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WACC Calculator
Calculate weighted average cost of capital using the market value of equity and debt, cost of financing and corporate tax rate.
Calculate Your WACC
Enter the company's capital structure and financing costs.
value
Total market value of the company's equity.
value
Total market value of interest-bearing debt.
%
Required return expected by equity investors.
%
Interest rate paid on the company's debt.
%
Effective corporate tax rate used to calculate the after-tax cost of debt.
You can enter the equity and debt values in any currency.
Both values only need to use the same currency.
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Calculate WACC in seconds.
Capital Breakdown
See equity and debt weighting.
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Understanding WACC
What Is Weighted Average Cost of Capital?
WACC estimates the average rate a company is expected to pay for the capital it receives from equity investors and lenders.
WACC stands for weighted average cost of capital. It combines the cost of equity and the after-tax cost of debt according to the proportion each source represents in a company's total capital structure.
A company may finance its operations through shareholder equity, borrowed funds or a combination of both. Because equity and debt usually have different costs, WACC provides one blended percentage that reflects the overall cost of financing.
WACC is commonly used in corporate finance, investment analysis, business valuation, capital budgeting and discounted cash flow analysis. It can also be used as a reference rate when evaluating whether a potential project may generate sufficient returns.
How It Works
How to Use the WACC Calculator
Calculate weighted average cost of capital in three simple steps.
Add Financing Costs
Enter the cost of equity, cost of debt and the company's corporate tax rate.
Review Your Result
See the calculated WACC, capital weights, after-tax debt cost and formula breakdown.
WACC Formula
How WACC Is Calculated
The formula combines the weighted cost of equity with the weighted after-tax cost of debt.
Standard WACC Formula
WACC = (E ÷ V × Re) + (D ÷ V × Rd × (1 − T))
The total cost of capital is calculated by weighting the cost of equity and the after-tax cost of debt according to their share of total financing.
After-Tax Cost of Debt
After-Tax Debt Cost = Rd × (1 − T)
The tax adjustment is included because interest expenses may reduce taxable income, which can lower the effective cost of debt financing.
E
Market Value of Equity
The total market value of shareholder equity.
D
Market Value of Debt
The market value of interest-bearing debt.
V
Total Capital
Equity plus debt, or E + D.
Re
Cost of Equity
The return expected by equity investors.
Rd
Cost of Debt
The effective interest rate on debt financing.
T
Corporate Tax Rate
The tax rate used in the debt tax adjustment.
Financial Analysis
Why WACC Matters
WACC can help analysts understand a company's financing cost and evaluate investment decisions more consistently.
Common Uses of WACC
WACC is widely used in financial modelling and corporate decision-making.
- Discounted cash flow valuation
- Capital budgeting decisions
- Investment project evaluation
- Business and company valuation
- Comparing financing structures
Important Considerations
WACC depends heavily on the quality of the inputs used. Changes in market value, interest rates, investor expectations or tax assumptions can change the final result.
A WACC estimate should be interpreted alongside the company's industry, risk profile, capital structure and financial objectives rather than viewed as a standalone measure.
Frequently Asked Questions
WACC Calculator FAQs
Answers to common questions about weighted average cost of capital.
WACC stands for weighted average cost of capital. It estimates the blended cost of the equity and debt a company uses to finance its operations.
Multiply the cost of equity by the proportion of equity in total capital, then add the after-tax cost of debt multiplied by the proportion of debt.
The standard WACC formula adjusts debt cost for taxes because interest expense may reduce taxable income, which can lower the effective cost of debt financing.
There is no universal good WACC. The appropriate level depends on the company's industry, financial risk, capital structure, market conditions and cost of financing.
WACC calculations commonly use market values because they are intended to reflect the current economic value of equity and debt. The appropriate approach can depend on the purpose and available data.
No. You can use dollars, pounds, euros or another currency as long as equity and debt values use the same currency.
Yes. The calculator is free to use and performs the calculation directly in your browser.