Weighted Average Cost of Capital (WACC) Calculator

Combine the weighted cost of equity and the after-tax cost of debt to produce a defensible WACC figure for capital budgeting, valuation, and hurdle-rate governance.

Share of capital financed by equity. Enter as percent or decimal between 0 and 100.
Required return on equity investors. Accepts percent or decimal input.
Share of capital financed by interest-bearing debt. Percent or decimal.
Average interest rate on debt before tax shields are applied.
Leave blank to assume 0%. Enter statutory tax rate as percent or decimal.

Verify input assumptions and ensure capital structure weights align with your valuation policy before relying on WACC outputs.

Examples

  • 60% equity at 10%, 40% debt at 5%, tax rate 25% ⇒ Weighted average cost of capital: 7.50 % | Equity contribution: 6.00 % | After-tax debt contribution: 1.50 % | Unassigned capital weight: 0.0 %
  • 70% equity at 12%, 20% debt at 6%, tax rate 21% ⇒ Weighted average cost of capital: 9.35 % | Equity contribution: 8.40 % | After-tax debt contribution: 0.95 % | Unassigned capital weight: 10.0 %

FAQ

What if my company also uses preferred stock?

Enter the equity and debt weights that represent the funded portion you want to analyse. The calculator reports any remaining share as unassigned capital, which you can treat as preferred equity or cash reserves handled outside the WACC formula.

Should I use book value or market value weights?

Market values are generally recommended because they reflect the opportunity cost of capital today. Book values can misstate the contribution of equity or debt when market conditions shift materially.

How do I estimate the cost of equity?

Most practitioners apply the Capital Asset Pricing Model (CAPM) or a multi-factor model to estimate the required return on equity. You can feed that resulting percentage directly into this calculator.

Can I override the tax rate for specific projects?

Yes. Set the tax rate to the marginal rate applicable to the project or jurisdiction. Leaving it blank assumes no tax shield on interest.

Additional Information

  • Inputs accept either percentages (e.g., 60) or decimals (e.g., 0.60); the calculator normalises them automatically.
  • The corporate tax rate is optional and defaults to 0% when left blank, reflecting scenarios without tax shields.
  • If equity and debt weights sum to less than 100%, the remainder is reported as unassigned capital weight (for cash, preferred stock, or other sources).
  • Output values are expressed as annual percentage rates suitable for hurdle-rate comparisons and DCF models.

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