WACC calculator
Work out a company’s cost of capital from its cost of equity, cost of debt and capital structure.
Discount rate · CAPM · Cost of debt · Free
Inputs
The 10-year Treasury yield is the usual choice.
1.0 moves with the market; the default is a stated judgement.
What investors ask over the risk-free rate; 4.5% to 6.5% is the usual range.
The rate the company borrows at today.
Debt over debt plus equity, at market values.
WACC
8.55%
80% equity at 9.50%, 20% debt at 4.74% after tax
Cost of equity
9.50%
4.0% + 1 × 5.5%
After-tax cost of debt
4.74%
6.0% × (1 − 21%)
WACC by beta and debt weight
Your case is marked| Beta \ Debt | 0% | 10% | 20% | 30% | 40% | 50% |
|---|---|---|---|---|---|---|
| 0.4 | 6.20% | 6.05% | 5.91% | 5.76% | 5.62% | 5.47% |
| 0.6 | 7.30% | 7.04% | 6.79% | 6.53% | 6.28% | 6.02% |
| 0.8 | 8.40% | 8.03% | 7.67% | 7.30% | 6.94% | 6.57% |
| 1.0 | 9.50% | 9.02% | 8.55% | 8.07% | 7.60% | 7.12% |
| 1.2 | 10.60% | 10.01% | 9.43% | 8.84% | 8.26% | 7.67% |
| 1.4 | 11.70% | 11.00% | 10.31% | 9.61% | 8.92% | 8.22% |
| 1.6 | 12.80% | 11.99% | 11.19% | 10.38% | 9.58% | 8.77% |
How it works
The cost of equity follows the capital asset pricing model: the risk-free rate plus beta times the equity risk premium. Beta measures how much the share moves with the market; the premium is what investors ask over the risk-free rate for holding the market as a whole.
Interest is tax-deductible, so the cost of debt counts after tax: the borrowing rate times one minus the tax rate.
The two are weighted by the capital structure at market values, debt over debt plus equity. The result is the rate a discounted cash flow uses to bring the company’s free cash flows back to today.
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Every tool, including the Finance OS workflows that run on a real company and the Excel models.