WACC Calculator — Weighted Average Cost of Capital
Who this is for: For corporate finance students computing a company's hurdle rate, and for analysts who want the weighting shown in the open instead of a single number from a spreadsheet cell.
Not the right tool for: Risk-matched project rates — one company-wide WACC misprices divisions that are riskier or safer than the firm · Estimating the inputs — cost of equity (CAPM) and market values are upstream of this calculator
Equity and debt values with their costs and the tax rate — get the weighted average cost of capital and the after-tax debt rate.
Quick answer: WACC = (E/V)·Re + (D/V)·Rd·(1−T). With $600K equity at 10%, $400K debt at 6%, and a 25% tax rate: weights 60/40, after-tax debt 4.50%, WACC = 7.80%. It's the minimum return the business must earn to satisfy both shareholders and lenders.
e.g. from CAPM
Interest is tax-deductible
| Component | Cost | Weight | Weighted contribution |
|---|---|---|---|
| Equity | 10.00% | 60.0% | 6.00% |
| Debt (after tax) | 6.00% × (1 − 25%) = 4.50% | 40.0% | 1.80% |
| WACC | 7.80% |
| Formula | WACC = (E/V)·Re + (D/V)·Rd·(1−T) |
|---|---|
| Worked example | E $600K @ 10%, D $400K @ 6%, tax 25% → WACC 7.80% |
| After-tax debt | 6% × (1−0.25) = 4.50% |
| Weights | Market values preferred over book values |
| Compiled | October 2026 |
What WACC combines
WACC is the blended price of the company's capital: each financing source weighted by its share of total value, with debt cheapened by the tax shield because interest is deductible. WACC = (E/V)·Re + (D/V)·Rd·(1−T). Example: $600K of equity at a 10% cost and $400K of debt at 6% pre-tax with a 25% tax rate: weights are 60/40, after-tax debt costs 4.50%, and WACC = 0.60×10% + 0.40×4.50% = 7.80%. That 7.80% is the minimum return the company's assets must earn to satisfy both shareholders and lenders — which is why it's the default discount rate for average-risk projects. Two disciplines keep the number honest: use market values, not book values (book equity understates what shareholders' stake is worth), and remember the tax shield only exists if the company actually has taxable income to shield.
Common uses
- Computing the discount rate for a DCF or a capital-budgeting case
- Homework: deriving after-tax cost of debt and the 60/40 weighting cleanly
- Sanity-checking a hurdle rate someone else's model asserted
- Seeing how a leverage change moves the blended cost of capital
Where these numbers come from
All results are computed in your browser from the standard closed-form formulas (and a numerical root-finder where no closed form exists — rates, IRR, YTM). Formulas follow the ordinary-annuity (END) convention used by the BA II Plus and HP 12C. Educational reference only — not investment, tax, or accounting advice.