WACC Calculator
This WACC calculator finds your company's weighted average cost of capital — the blended return rate that satisfies both equity and debt investors, and the standard discount rate used to evaluate whether a company's investments create value. Enter your capital structure and cost of each to see your WACC.
Total market capitalization, or your best estimate of equity value.
Total interest-bearing debt outstanding.
The return equity investors require — often estimated via CAPM.
The interest rate on your debt, before the tax shield.
Interest is tax-deductible, so debt's after-tax cost is lower than its stated rate.
9.50%
The blended rate a company must earn on its investments to satisfy both equity and debt holders.
Frequently asked questions
Why is debt usually cheaper than equity?+
Debt holders take less risk than equity holders (they're paid before shareholders and have contractual interest payments), so they require a lower return — and interest is tax-deductible, further lowering debt's effective cost to the company.
Should I use book value or market value for the weights?+
Market value is theoretically correct and standard practice — book (accounting) values can be significantly outdated, especially for equity, where market capitalization often differs substantially from balance-sheet book value.
How is cost of equity usually estimated?+
The Capital Asset Pricing Model (CAPM) is the most common approach: risk-free rate plus the company's beta times the equity market risk premium — a more advanced calculation this calculator doesn't perform, so you'll need that estimate as an input here.
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