FinanceCalculatorFree

WACC Calculator

Calculate your company's Weighted Average Cost of Capital (WACC) to evaluate investments and valuations.

Enter your capital structure and costs to calculate WACC.

Total market cap or shareholder equity
Includes loans, bonds, and interest-bearing liabilities
Often estimated via CAPM (8–15% typical)
Pre-tax interest rate on borrowings
Used for debt tax shield (e.g., US federal is 21%)

Why It Matters

The Weighted Average Cost of Capital (WACC) represents the minimum return a company must earn to satisfy its investors and creditors. It’s a cornerstone in valuation, capital budgeting, and strategic finance.

How to Use

  • Enter the market value of equity
  • Add the market value of debt
  • Input the cost of equity (e.g., from CAPM)
  • Enter the cost of debt (pre-tax interest)
  • Set the corporate tax rate for tax shield
  • Click “Calculate WACC”

Formula: WACC

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

E = Equity
D = Debt
V = E + D
Re = Cost of Equity
Rd = Cost of Debt
Tc = Tax Rate

Real-World Uses

  • Valuation: Discount rate in DCF models
  • M&A: Assess acquisition feasibility
  • Capital Budgeting: Evaluate project ROI
  • Investor Reporting: Show hurdle rate
  • Financing Strategy: Optimize capital mix

Example Output

ComponentValue
Equity$1M
Debt$500K
Cost of Equity10%
Cost of Debt6%
Tax Rate25%
WACC7.92%

Tips to Improve Accuracy

  • ✅ Use market values, not book values
  • ✅ Estimate cost of equity using CAPM
  • ✅ Include all interest-bearing debt
  • ✅ Adjust tax rate for regional differences
  • ✅ Recalculate quarterly for dynamic firms

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