WACC Calculator

This WACC calculator finds a company's weighted average cost of capital by blending the cost of equity and after-tax cost of debt by capital structure.

WACC Calculator
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WACC —
Equity weight —
Debt weight —
Total capital —

We always strive to use the latest data for every variable so our results and reports are as accurate as possible. Even so, errors are possible — you should not rely on this tool or its report alone, and we accept no liability for any decision made based on it.

What it does

The WACC Calculator works out a company's Weighted Average Cost of Capital, the blended annual rate a business pays to finance its assets across equity and debt. It weights each source by its share of total capital and applies the tax shield on interest.

Data sources & parameters

This calculator uses standard financial formulas and runs entirely in your browser. It needs no external rate data — your result is computed only from the values you enter above.

We always strive to use the latest data for every variable so our results and reports are as accurate as possible. Even so, errors are possible — you should not rely on this tool or its report alone, and we accept no liability for any decision made based on it.

The formula

WACC = (E/V) × Re + (D/V) × Rd × (1 − Tc), where E and D are the values of equity and debt, V = E + D, and Tc is the tax rate

How it works

Enter the market value of equity and debt, the cost of each, and the corporate tax rate. The tool weights the cost of equity and the after-tax cost of debt by their share of the capital structure and adds them into a single percentage.

Where it is used

  • Setting the discount rate for a DCF valuation
  • Judging whether a project clears its cost of capital
  • Comparing the funding cost of different capital structures

Worked example

A firm funded with $600,000.00 of equity and $400,000.00 of debt has a 12% cost of equity and a 6% pre-tax cost of debt at a 25% tax rate. Its capital is … equity and … debt, giving a WACC of ….

What the WACC calculator does

The WACC calculator works out a company's weighted average cost of capital: the blended annual rate a business pays to finance its assets with equity and debt. It combines the return shareholders require with the interest lenders charge, weights each by its share of total capital, and accounts for the tax relief on debt interest.

The result is the rate of return the company's investments must earn to satisfy everyone who has put money in, a benchmark for finance teams, analysts, and investors.

How WACC is calculated

Shareholders supply equity and lenders supply debt; each demands a return and provides a different share of the total. The weighted average combines those returns in proportion to the capital each provides.

Shareholders are last in line if the business fails, so they demand a higher return. Lenders rank ahead of them and often hold security, so they accept a lower rate. Interest is usually tax deductible as well, which lowers the effective cost of debt; the calculator reduces the cost of debt by one minus the tax rate before blending it in.

WACC = (E/V) × Re + (D/V) × Rd × (1 − Tc)

E is the value of equity, D the value of debt, and V their sum. Re is the cost of equity, Rd the pre-tax cost of debt, and Tc the corporate tax rate. The weights E/V and D/V add up to one hundred percent, so WACC sits between the after-tax cost of debt and the cost of equity.

The inputs

  • A larger market value of equity pulls WACC towards the cost of equity, usually the higher of the two costs.
  • A larger market value of debt pulls WACC towards the cheaper, tax-shielded cost of debt.
  • The cost of equity is the return shareholders require, often estimated with the capital asset pricing model. Raising it lifts WACC directly.
  • The cost of debt is the pre-tax interest rate on borrowings; the calculator applies the tax shield automatically.
  • A higher corporate tax rate deepens the tax shield and lowers the effective cost of debt, nudging WACC down.

The costs and tax rate are entered directly, so the result reflects exactly the assumptions you choose, and you can test how sensitive it is to each one.

Reading the output

The calculator returns the WACC as an annual percentage, plus the equity and debt weights, shown in a donut chart. A mostly equity-funded company shows a WACC close to its cost of equity; one that leans on debt shows a lower blended rate.

Two firms can share the same WACC with very different structures, and the weights show how much of the result comes from cheap debt or expensive equity. If a small change in the debt share moves WACC sharply, the business is sensitive to its financing mix, which matters before you build a valuation on that rate.

Where WACC is used

WACC is most often the discount rate in a discounted cash flow valuation: a lower rate gives a higher present value and vice versa. Valuations can be highly sensitive to it, so the capital weights and costs matter as much as the cash flow forecast.

It also serves as a hurdle rate. A new project that earns less than the WACC destroys value even if it looks profitable on its own, because the capital could have been returned to investors. The costs of equity and debt are judgements about the future, so treat the WACC as an estimate.

Common mistakes

The cost of equity is usually the biggest source of error, because it cannot be observed and has to be modelled. Small changes in the assumed risk premium or beta can move WACC by a full percentage point and swing a valuation sharply, so when a valuation looks unstable, state a range of WACC values.

The costs should match the currency, time horizon, and risk of the cash flows being discounted. Discounting nominal cash flows with a real WACC, or applying a domestic WACC to foreign-currency cash flows, builds an error into the result. The capital weights should reflect a target or long-run structure; a company that has just drawn down a large loan may show an unusually high debt weight.

WACC is a cost of financing, not a measure of business risk, competitive position, or management quality. A low WACC can accompany a fragile company, so cross-check it against comparable companies.

About This WACC Calculator

Use this WACC calculator to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.

Frequently asked questions

How does the WACC calculator work?
The calculator takes the market value of equity and debt, the cost of each, and the corporate tax rate. It weights the cost of equity and the after-tax cost of debt by their share of total capital and adds them together to produce a single WACC percentage, along with the equity and debt weights.
What is WACC used for?
WACC is the blended rate a company pays to finance its assets. It is most often used as the discount rate in a discounted cash flow valuation, and as a hurdle rate: a project or investment should earn more than the WACC to create value for the providers of capital.
Why is the cost of debt reduced by the tax rate?
Interest on debt is usually tax deductible, so each unit of interest lowers the tax bill. The after-tax cost of debt is the pre-tax rate multiplied by one minus the tax rate, which captures this tax shield and makes debt cheaper than its headline rate suggests.
Should I use book values or market values?
Market values are preferred because WACC estimates the return investors currently require, not what was recorded historically. Use the market capitalisation for equity and the market value of debt where available; book value of debt is often a reasonable approximation when market prices are not observable.
Does a lower WACC always mean a better company?
Not necessarily. Adding cheap debt can lower WACC up to a point, but too much debt raises financial risk and eventually pushes up both the cost of equity and the cost of debt. WACC is a snapshot of financing cost, not a complete measure of quality.
Is my data kept private?
Yes. The calculation runs entirely in your browser. Nothing you enter is uploaded, stored, or shared with anyone.

About the author

Taha Kheirandish

Written and reviewed by

Taha Kheirandish

Economics student and independent researcher

Taha Kheirandish reads tax codes the way other people read maps — to find out where a system actually leads, not where it claims to go.

He is an economics student, and his work here is comparative by design. A pension deferral bonus in Quebec, a commuting allowance in Germany, a rent-increase ceiling in the Netherlands: each is a decision a government made about how money should move, and each reads differently once you set it beside eight others. He builds and checks these calculators across nine markets from primary sources — the regulation rather than a summary of it, the ministry’s own circular rather than a news item quoting it.

That is the editorial standard of the site as well as his habit. Every rate, threshold and bracket here carries the document it was read from and the date it takes effect, and gets re-checked when the law moves rather than when someone happens to notice.

He is a researcher, not a licensed adviser, and nothing on this site is personal financial advice. It is arithmetic done carefully with its sources shown — so that you can check it, and take it to someone who is.

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