WACC (Weighted Average Cost of Capital) is the blended rate a company must earn on its asset base to satisfy equity holders and debt holders proportionally. It is used as the discount rate in DCF analysis.

How is cost of equity calculated?

This tool supports both a direct entry and the CAPM method: Cost of Equity = Risk-Free Rate + Beta × (Market Return − Risk-Free Rate). Toggle the CAPM mode to auto-calculate it.

Why is the cost of debt multiplied by (1 − tax rate)?

Interest expense is tax-deductible, so the effective cost of debt is reduced by the tax shield. After-tax cost of debt = Pre-tax rate × (1 − corporate tax rate).

Should I use book value or market value for weights?

Finance theory recommends market values. Book values can distort the weights significantly for mature firms or when equity trades far from book.

What is a typical WACC range?

For large US public companies WACC commonly falls between 7% and 12%. Tech/growth companies often run higher; utilities often run lower due to stable cash flows and higher leverage.

WACC Calculator

Enter your capital structure inputs to compute WACC — the blended rate a company must earn to satisfy all capital providers.

Capital Structure

Market Value of Equity ($)

Market Value of Debt ($)

Cost of Equity

Cost of Equity (%)

Cost of Debt & Tax

Pre-Tax Cost of Debt (%)

Corporate Tax Rate (%)

Weighted Average Cost of Capital

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WACC = We × Ke + Wd × Kd × (1 − t)

Equity Weight

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Debt Weight

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Cost of Equity (Ke)

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After-Tax Cost of Debt

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Summary

The WACC Calculator determines the Weighted Average Cost of Capital by weighting the cost of equity and after-tax cost of debt across a company's capital structure. It accepts market values of debt and equity, pre-tax borrowing rates, corporate tax rates, and cost of equity entered directly or derived through CAPM. The resulting rate serves as a hurdle discount rate for cash flow valuation, assuming the existing capital proportion remains constant over time.

How it works

Enter the market value of equity and market value of debt.
Supply the cost of equity — either directly or via CAPM inputs (risk-free rate, beta, market premium).
Enter the pre-tax cost of debt and the corporate tax rate.
The tool computes capital weights and applies the standard WACC formula.
Results update instantly as you type; copy the WACC percentage with one click.

Use cases

Discount projected cash flows in a DCF valuation model.
Evaluate whether a new investment clears the hurdle rate.
Compare capital structure efficiency across companies.
Assess the impact of changing debt/equity mix on cost of capital.
Academic finance coursework and CFA exam practice.
Pitch deck or board presentation to justify target returns.

Frequently Asked Questions

Last updated: 2026-06-11 · Reviewed by Nham Vu