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Professional Financial Tool

WACC Calculator

Calculate Weighted Average Cost of Capital with CAPM, industry betas, credit ratings, and international tax rates. Used by investment banks, analysts, and corporate finance professionals.

20+
Countries
43+
Industries
22
Credit Ratings
Real-time
Calculations

Quick Conversion

Formula: WACC = wd·rd·(1−T) + we·re

Company & Region

Capital Structure (in millions)

$M

Small Cap

$M
$M
Net Debt
$200.00M
Enterprise Value
$1,200.00M
D/E Ratio
0.30x

Cost of Equity (CAPM)

%
%
Cost of Equity Formula: Re = Rf + β × ERP + CRP + SRP
Re = 4.25% + 1.15 × 5.50% + 1.5%= 12.07%

Cost of Debt

%
After-Tax Cost of Debt: Rd = (Rf + Spread) × (1 - T)
Rd = (4.25% + 1.60%) × (1 - 21%) = 4.62%
Tax Shield: 1.23% saved per year on debt interest
Weighted Average Cost of Capital
10.83%
Your Company WACC
WACC = (E/V × Re) + (D/V × Rd × (1-T))
= (83.3% × 12.07%) + (16.7% × 4.62%)

WACC Components

Cost of Equity12.07%
Weight: 83.3%Contribution: 10.06%
Cost of Debt (After-Tax)4.62%
Weight: 16.7%Contribution: 0.77%
Pre-tax: 5.85% | Tax Shield: -1.23%

Key Inputs

Risk-Free Rate4.25%
Equity Risk Premium5.50%
Beta (β)1.15
Credit Spread1.60%
Tax Rate21.0%
Country🇺🇸 United States
IndustrySoftware (System & Application)

Industry Benchmark

Your WACC10.83%
Industry Avg9.80%
1.03% above industry average

Frequently Asked Questions

Understanding WACC

What is WACC?

The Weighted Average Cost of Capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is proportionately weighted. It represents the average rate of return a company needs to earn on its investments to maintain its current stock price.

The WACC Formula

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

Where:

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

Key Uses:

  • DCF (Discounted Cash Flow) valuations
  • Capital budgeting decisions
  • Setting hurdle rates for projects
  • Evaluating M&A targets
  • Performance benchmarking
  • Capital structure optimization

Cost of Equity (CAPM)

The Capital Asset Pricing Model (CAPM) is used to calculate the cost of equity:

Re = Rf + β × (Rm - Rf)

Where Rf is the risk-free rate, β is the stock's beta, and (Rm - Rf) is the equity risk premium.

Why WACC Matters

WACC is crucial for investment decisions because it represents the minimum return that investors expect for providing capital to the company. Projects that generate returns above WACC create value, while those below WACC destroy value. Understanding and optimizing WACC is essential for corporate finance professionals, investment analysts, and business owners making strategic decisions.

Learn More

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