WACC Calculator

WACC = (E/V)·Re + (D/V)·Rd·(1−T). Blended cost of capital weighted by debt + equity.

Inputs

Result

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General calculation reads

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How to use this calculator

  • Enter market values of equity + debt.
  • Cost of equity from CAPM; debt from yield to maturity.
  • Tax rate ~21% federal US 2025.

About this calculator

WACC = average cost the firm pays to finance assets, weighted by capital structure mix. After-tax debt cost (Rd × (1−T)) reflects interest tax shield. Used as discount rate in DCF valuation: cash flows above WACC create value, below destroy it. Typical US WACC: 6-10% large-cap, 10-15% mid/small-cap, 15-25% startup/early-stage.

Frequently asked

Why after-tax debt cost?+
Interest is tax-deductible; saves T × interest. Effective cost of $1 debt interest = $1 × (1−T).
Cost of equity Re from CAPM?+
Re = risk-free rate + β × equity-risk premium. 4% + 1.0 × 5.5% = 9.5%.
Book vs. market values?+
Use market for theoretical accuracy. Book is acceptable approximation for unlisted firms.
WACC for new project vs. firm?+
Project WACC may differ from firm WACC if risk profile differs (different industry/geography/regulation).
Negative WACC?+
Mathematically possible (e.g. tax shield > cost) but not realistic. Verify inputs.

Related calculators

Dividend Discount Model (DDM)
P = D₁ / (r − g). Stock price = next dividend / (required return − growth rate).
Gordon Growth Model
Same as DDM: P = D₁ / (k − g). Single-stage constant-growth model.
Free Cash Flow (FCF)
FCF = EBIT(1−T) + D&A − CapEx − ΔNWC. Cash available to all capital providers.
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EBITDA = Net Income + Interest + Tax + D&A. Operating earnings before financing + non-cash items.
Return on Equity (ROE)
ROE = Net Income / Avg Shareholders' Equity. Profitability per dollar of equity.
Return on Assets (ROA)
ROA = Net Income / Avg Total Assets. Profitability per dollar of all assets.

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