WACC Calculator

WACC Calculator is used to calculate the Weighted Average Cost of Capital, the minimum acceptable return that a company must earn on an existing asset base to satisfy its creditors, owners, and other providers of capital, or they will invest elsewhere. It is a way for companies to determine if a prospective investment is worthwhile to undertake.

Weighted Average Cost of Capital
What does Weighted Average Cost of Capital (WACC) mean?
The weighted average cost of capital or WACC is the rate a company expects to pay on average to finance its assets. Company’s primary sources of financing include two things; debt and equity. WACC is the average cost of raising that money.
Importance of WACC
The importance WACC is of financial use to both investor and the company. It is a significant tool for the companies to make their investment decisions and evaluate projects with similar and dissimilar risks.

WACC = x Re + x Rd x (1 – Tc)


  • Re = cost of equity
  • Rd = cost of debt
  • E = market value of the firm’s equity
  • D = market value of the firm’s debt
  • V = E + D
  • E/V = percentage of financing that is equity
  • D/V = percentage of financing that is debt
  • Tc = Tax rate

Let’s consider a firm's financial data:

  • Equity = $8,000
  • Debt = $2,000
  • Re = 12.5%
  • Rd = 6%
  • Tax rate = 30%

Applying, the formula:-

  • WACC = [( x 0.125)] + [( * 0.06 * (1 - 0.3)]

WACC for this firm is 10.84%.