Blended cost of capital. The WACC Calculator takes market value of equity, market value of debt, cost of equity, pre-tax cost of debt, corporate tax rate and returns weighted average cost of capital plus after-tax cost of debt, equity weight. Results update as you type, and the formula is shown under the result so you can repeat it in your own spreadsheet.
Investment maths is about comparing money at different points in time on a fair basis. Compound rates, discounting and annualised returns let you compare options of different sizes and durations. Use the worked example below to check the maths against your own figures.
How the WACC Calculator works
The blended return the business must earn to satisfy both lenders and owners. Interest is tax-deductible, so debt is cheaper than its headline rate. Use WACC as the discount rate in NPV and DCF calculations.
Worked example
With the example values (market value of equity of $6,000,000, market value of debt of $4,000,000, cost of equity of 12%, pre-tax cost of debt of 8%, corporate tax rate of 25%), the weighted average cost of capital is 9.60%; after-tax cost of debt 6%, equity weight 60%. Change any figure above and the result updates immediately; use Copy results to paste the summary into a note or email.
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Frequently Asked Questions
How is weighted average cost of capital calculated?
WACC = E ÷ (E + D) × cost of equity + D ÷ (E + D) × cost of debt × (1 − tax rate).
Which figures do I need?
Market value of equity, market value of debt, cost of equity, pre-tax cost of debt, corporate tax rate. Take them from the same period and the same set of accounts or reports so the ratio is consistent, and check the example values as a guide to the units expected.
Does the calculator account for taxes and fees?
Only where there is an input for them. For a true net return, add fees and taxes to your inputs or use the stock and crypto profit calculators, which include them.
