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WACC Calculator

Weighted average cost of capital — the discount rate for a DCF valuation.

Inputs

Shareholder equity

Also called: Net assets, book value

Where to find it: Balance sheet, bottom of the liabilities & equity side.

How to derive: Total assets − total liabilities.

Total debt

Also called: Interest-bearing debt, borrowings

Where to find it: Balance sheet: short-term + long-term borrowings (bonds, loans).

How to derive: Add short-term and long-term interest-bearing debt.

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Result — live

WACC
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Equity weight
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Debt weight
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Cost of debt is taken after tax (interest is tax-deductible). Typical WACC: 7–10%.

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The WACC (Weighted Average Cost of Capital) is the blended cost of equity and debt, weighted by how much of each the company uses. It is the discount rate for a whole-company DCF valuation. This calculator blends both parts for you.

How the formula works

Cost of equity and debt are weighted by their share; the cost of debt counts after tax because interest is tax-deductible:

WACC = equity weight × cost of equity + debt weight × cost of debt × (1 − tax rate)

Example: equity $8,000m (80%), debt $2,000m (20%), cost of equity 9%, cost of debt 4%, tax 25%. WACC = 0.8×9% + 0.2×4%×0.75 = 7.2% + 0.6% = 7.8%.

How to read the result

The WACC is your discount rate — and it strongly affects fair value:

  • Typically 7–10% for a soundly financed company.
  • Lower WACC — future cash flows are discounted gently, fair value rises.
  • Higher WACC — harder discounting, fair value falls.

The equity/debt weights also show you the capital structure.

What to watch out for

  • Use market values for equity (market cap), not book value.
  • Take debt after tax — interest is deductible.
  • Heavy debt lowers the WACC on paper but raises risk — do not chase an artificially low rate.

Frequently asked questions

Why is the cost of debt taken after tax?
Interest reduces taxable profit, so the company saves tax. The real burden is the rate × (1 − tax rate) — this tax shield lowers the WACC.
What is a typical WACC?
For most companies it lands at 7–10%. Stable utilities tend lower, young or cyclical firms higher.
Where do I get cost of equity and cost of debt?
Cost of equity comes from CAPM, cost of debt from interest expense relative to debt. In our Fair Value Calculator the WACC is already computed for 12,000+ stocks — no typing required.

Not financial advice · No buy/sell recommendations · Past performance is not a guarantee of future results.