Compute the after-tax weighted average cost of capital from equity, debt, costs, and the tax rate.
| WACC (%) | – |
Use this WACC calculator when discounting a firm’s cash flows, or as a hurdle for projects with the same mix of funding. Preferred stock is not included. E and D can be market values or simple weights (70 and 30); only the mix matters.
WACC = (E/V) × cost of equity + (D/V) × cost of debt × (1 − tax), where V = E + D. Type percents as 10, 5, 24. E + D must be positive. The result is a percent.
Equity: Equity value or weight. 70 works if debt is 30.
Debt: Debt value or weight, same units as equity.
Cost of equity (%): Required return on equity as a percent (from CAPM or similar).
Cost of debt (%): Interest rate on debt as a percent, before tax.
Tax (%): Corporate tax rate as a percent, e.g. 24 for 24%.
WACC (%): After-tax weighted average cost of capital.
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