WACC Calculator

Calculate weighted average cost of capital from equity, debt, and tax rate.
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WACC

9.28%

Components

Equity Weight62.50%
Debt Weight37.50%
After-Tax Cost of Debt4.74%
WACC9.28%

Use the WACC Calculator above to calculate your results. Enter your values and see instant results — all calculations run in your browser.

Disclaimer: This calculator is for informational purposes only and does not constitute tax, financial, or legal advice. Results are estimates based on the information you provide and current rates. Always consult a qualified tax professional or financial advisor for advice specific to your situation.

How It Works

This WACC Calculator determines a company's weighted average cost of capital, a crucial metric for evaluating investment opportunities and corporate financing decisions. Understanding WACC helps assess a project's viability; for instance, a project generating an 8% return might be rejected if the company's 2026 WACC is 10%.

The WACC formula combines the cost of equity (Ke) and the after-tax cost of debt (Kd * (1 - Tax Rate)), weighted by their respective proportions in the company's capital structure (E/(E+D) and D/(E+D)). This reflects the blended rate of return required by both debt and equity holders.

Accurate WACC calculation hinges on realistic inputs; using outdated market data or an incorrect tax rate can significantly distort the result. Remember that WACC is a forward-looking metric, so future expected costs of equity and debt are more relevant than historical averages.

Example: Tech Innovators Inc. WACC Calculation

  1. 1 Input: Equity Value = $500,000,000; Debt Value = $200,000,000; Cost of Equity = 12.5%; Cost of Debt = 6.0%; Corporate Tax Rate = 21% (for 2026).
  2. 2 Calculation: Equity Weight = 500M / (500M + 200M) = 0.7143. Debt Weight = 200M / (500M + 200M) = 0.2857. After-tax Cost of Debt = 6.0% * (1 - 0.21) = 4.74%. WACC = (0.7143 * 12.5%) + (0.2857 * 4.74%).
  3. 3 Intermediate Result: (8.92875% from equity) + (1.3541% from debt).
  4. 4 Final Result: The Weighted Average Cost of Capital (WACC) for Tech Innovators Inc. is 10.28%. This means the company needs to generate at least a 10.28% return on its investments to satisfy its capital providers.

Source: SEC · Last updated: April 2026

Frequently Asked Questions

What is WACC used for?
WACC (weighted average cost of capital) is the minimum return a company must earn on its existing assets to satisfy its creditors, owners, and investors. It is used as the discount rate in DCF valuations and as a hurdle rate for evaluating new projects.
How do I calculate WACC?
WACC = (E/V x Re) + (D/V x Rd x (1-T)), where E is equity value, D is debt value, V is total value (E+D), Re is cost of equity, Rd is cost of debt, and T is the corporate tax rate. The tax adjustment on debt reflects the tax deductibility of interest.
What is a typical WACC for a company?
WACC varies by industry and risk profile. Average WACC for S&P 500 companies ranges from 7-10%. Tech and growth companies tend to have higher WACC (10-14%) due to more equity financing. Utilities have lower WACC (5-7%) due to stable cash flows and significant debt capacity.

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