What is WACC?
The weighted average cost of capital blends required returns on equity and after-tax debt.
WACC Calculator
Blend after-tax cost of debt and cost of equity by capital structure weights.
Enter capital structure and costs
Market values of equity and debt, required equity return, pre-tax debt cost, and corporate tax rate.
About this calculator
How to use WACC Calculator, plus the formulas and logic behind the results.
Tool description
WACC is the blended required return for the firm’s capital providers. After-tax debt cost reflects the tax deductibility of interest in many jurisdictions.
How to use
- Enter market values of equity and debt.
- Enter cost of equity and pre-tax cost of debt as percents.
- Enter the corporate tax rate.
- Select Calculate to view WACC and capital weights.
Formulas & reference
WACC = (E/(E+D))×Re + (D/(E+D))×Rd×(1−t)Equity weight = E/(E+D)Debt weight = D/(E+D)
WACC tips
- Common discount rate in DCF
- Higher leverage can lower WACC until risk rises
- Rd is pre-tax; tax shield applied via (1−t)
- Educational formula only
Calculation logic
Capital weights use E+D as total. Equity contribution is weight×Re. Debt contribution is weight×Rd×(1−t). Percents are converted to decimals internally.
Prefer market values over book values when possible. Preferred stock and other claims are omitted here.
WACC Calculator FAQ
Common questions about the calculation and how to interpret the estimate.
Why multiply debt cost by (1−t)?
Interest is often tax-deductible, lowering the effective cost of debt.
Should I use book or market values?
Market values are preferred for forward-looking WACC.
Can debt be zero?
Yes—then WACC equals the cost of equity.
Is Re the same as CAPM?
Cost of equity is often estimated with CAPM, but you can enter any Re assumption.
Does WACC include preferred stock?
Not in this simplified two-claim model.