🏦 Cost of Capital Calculator (WACC)
Calculate the weighted average cost of capital
How to Use This Calculator
1
Enter capital structure
Input equity and debt market values.
2
Enter rates
Provide cost of equity, cost of debt, and tax rate.
3
Calculate
Get the weighted average cost of capital.
Formula
WACC = (E/V)×Re + (D/V)×Rd×(1−T)
Where: V = E + D
Example: E=$5m, D=$3m, Re=10%, Rd=5%, T=21% → WACC = 7.35%
About Cost of Capital (WACC)
WACC represents the blended cost of financing from equity and debt. It is widely used as a discount rate for valuation and capital budgeting.
Tips
- Use market values (not book) for capital weights
- Costs should reflect forward-looking required returns
- Match tax rate to the jurisdiction and timing
Frequently Asked Questions
Should I use target or current weights?
Target capital structure is often preferred for forward-looking analysis.
Pre-tax or after-tax cost of debt?
Use after-tax via Rd × (1 − T) as shown in the formula.
Can WACC be used for all projects?
Use project-specific discount rates if risk differs from the firm's average.