Please enter your values in the Weighted Average Cost of Capital (WACC) Calculator. Example is included below.
Total Equity (E):
Cost of Equity in % (Re):
Total Debt (D):
Cost of Debt in % (Rd):
Corporate Tax Rate in % (Tc):
How to use the Weighted Average Cost of Capital (WACC) Calculator
Let’s review a simple example in order to demonstrate how to use the WACC Calculator.
Suppose that you’d like to compute the WACC given the following information:
- Total Equity (E) = 20000
- Cost of Equity (Re) = 12%
- Total Debt (D) = 8000
- Cost of Debt (Rd) = 5%
- Corporate Tax Rate (Tc) = 10%
Enter the above values in the WACC calculator, and then click on the Calculate WACC button:
You’ll then get a WACC of 9.86%:
How to Manually Derive the WACC
You may use the following formula to manually calculate the WACC:
E x Re D x Rd x (1 - Tc) WACC = E + D + E + D
Where:
- E = Total Equity
- Re = Cost of Equity
- D = Total Debt
- Rd = Cost of Debt
- Tc = Corporate Tax Rate
For example, let’s suppose that your goal is to calculate the WACC, given the following information:
- Total Equity (E) = 20000
- Cost of Equity (Re) = 12%
- Total Debt (D) = 8000
- Cost of Debt (Rd) = 5%
- Corporate Tax Rate (Tc) = 10%
You can then enter the above values in the WACC formula:
E x Re D x Rd x (1 - Tc) 20000 x 0.12 8000 x 0.05 x (1-0.1)
WACC = E + D + E + D = 20000+8000 + 20000+8000
You’ll get a WACC of 0.0986 or 9.86%.