WACC Calculator

Enter the market value of equity and debt, their costs, and the tax rate to calculate weighted average cost of capital.

How to Use the WACC Calculator

Fill in the market value of equity and debt, then the cost of each and the tax rate — WACC and the two capital weights are computed together from all five fields.

Weighted average cost of capital blends what a company pays its equity holders and its lenders into a single hurdle rate — the minimum return a project or investment needs to clear before it's actually creating value rather than just breaking even on the cost of the money funding it.

Equity Weight = Equity ÷ (Equity + Debt)
Debt Weight = Debt ÷ (Equity + Debt)
WACC = (Equity Weight × Cost of Equity) + (Debt Weight × Cost of Debt × (1 − Tax Rate))

Debt gets the after-tax treatment because interest payments are usually tax-deductible — the actual cost of borrowing to the company is lower than the stated interest rate once that deduction is accounted for. Equity gets no such discount; dividends and the return equity investors expect aren't tax-deductible expenses.

Cost of equity and cost of debt are both entered here rather than derived, since deriving cost of equity properly (CAPM, beta, a market risk premium) is its own separate calculation with its own set of assumptions. This tool starts from those two numbers already in hand and does the blending.

The two weight percentages are shown alongside WACC for a reason: a small shift in the debt-equity mix changes WACC more than most people expect, because it changes which cost — the pricier equity cost or the cheaper after-tax debt cost — carries more of the blend.