WACC Calculator

Category: Finance
- May 15, 2025
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Calculate the Weighted Average Cost of Capital (WACC) for your company or investment. WACC represents the average rate that a company is expected to pay to finance its assets, including the cost of debt and equity.

Cost of Equity

%
E.g., 10-year government bond yield
Measure of volatility relative to the market
%
Expected market return or long-term average

Cost of Debt

%
Interest rate on new debt
%
Marginal tax rate for your company

Capital Structure

%
Percentage of financing from equity
%
Percentage of financing from debt

About the Weighted Average Cost of Capital (WACC)

The Weighted Average Cost of Capital (WACC) represents the average rate that a company is expected to pay to finance its assets, taking into account the different sources of financing and their relative weights.

WACC Formula

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

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

The cost of equity can be calculated using different methods:

  • CAPM: Re = Rf + β × (Rm - Rf)
  • Dividend Growth Model: Re = (D1 / P0) + g
  • Where:
    • Rf: Risk-free rate
    • β: Beta (market risk)
    • Rm: Expected market return
    • D1: Expected dividend one year from now
    • P0: Current stock price
    • g: Expected dividend growth rate
Applications of WACC
  • Capital budgeting decisions
  • Discounted cash flow (DCF) analysis
  • Evaluating investment opportunities
  • Corporate valuation
  • Measuring financial performance

This calculator is for informational purposes only. The accuracy of the calculations depends on the accuracy of the inputs provided. Financial markets can be volatile, and past performance is not indicative of future results.

What Is the WACC Calculator?

The Weighted Average Cost of Capital (WACC) Calculator helps estimate the overall cost a company incurs to Finance its operations through a mix of debt and equity. This figure is a key input in Financial analysis, business valuation, and Investment decisions.

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

How to Use the Calculator

This calculator is designed to provide a clear and quick way to estimate your company’s WACC. It guides you through entering essential details, such as your capital structure, cost of equity, and cost of debt.

Steps to Use:

  • Choose how you want to calculate the cost of equity: CAPM, Dividend Growth Model, or manual input.
  • Enter values for risk-free rate, beta, market return, dividend yield, or growth rate, depending on your method.
  • Input the pre-tax cost of debt and corporate tax rate.
  • Specify how much of your financing comes from equity and debt.
  • Click the "Calculate WACC" button to get your results.

The calculator instantly displays:

  • WACC: The blended cost of capital.
  • Cost of Equity: The return investors expect from equity.
  • After-Tax Cost of Debt: The effective interest cost after tax benefits.

Why WACC Matters

WACC is a key indicator of how much a company must earn to satisfy its investors. It also serves as a benchmark rate for investment decisions and is widely used in loan repayment analysis, financial forecasts, and debt reduction tools.

Applications Include:

  • Capital budgeting and investment evaluation
  • Business and asset valuation
  • Discounted cash flow (DCF) modeling
  • Setting hurdle rates for projects

This calculator also complements Other tools like a Loan Payment Calculator for evaluating monthly loan costs and repayment breakdowns, a Debt Repayment Calculator for managing debt strategies, and a Personal Loan Calculator for projecting personalized loan costs.

Frequently Asked Questions (FAQ)

What is a good WACC value?

A lower WACC usually indicates lower risk and cheaper financing. However, what's considered "good" depends on your industry and capital structure.

Can WACC be used for personal finance?

While WACC is a corporate finance metric, understanding it can improve decision-making around debt and equity, similar to using a personal loan estimate tool or loan cost estimator.

How is this different from a loan payment calculator?

A loan payment calculator focuses on specific loan repayment schedules, monthly costs, and interest breakdowns. The WACC Calculator focuses on the broader cost of financing a company, not individual loan details.

Can I adjust for tax impacts?

Yes, the calculator factors in your corporate tax rate to give an accurate after-tax cost of debt, which influences your WACC.

Does this calculator work for startups?

Yes. Whether you're managing a startup or an established business, calculating WACC helps you understand your financing costs and plan your capital strategy effectively.

How This Calculator Can Help You

  • Compare financing options more effectively
  • Support investment and project appraisal
  • Refine your loan repayment guide or debt payoff strategy
  • Serve as a foundation for business valuation and loan repayment estimates
  • Inform long-term financial planning and capital structure choices

Use the WACC Calculator alongside tools like a debt repayment tool, monthly loan estimator, or loan amortization details calculator for a well-rounded financial strategy.