Measure blended financing cost for better valuation decisions. Model debt, equity, preferred shares, and taxes. See assumptions, outputs, charts, and exports in one place.
Use market values when possible. The layout stays single column overall, while fields use a responsive three, two, or one column grid.
| Item | Example Value | Note |
|---|---|---|
| Debt Market Value | 400,000 | Use fair market value when available. |
| Equity Market Value | 600,000 | Usually market capitalization. |
| Preferred Market Value | 100,000 | Set zero when none exists. |
| Tax Rate | 25% | Applies to debt tax shield. |
| Cost of Equity | 11.20% | Can come from CAPM or manual input. |
| Cost of Debt | 7.00% | Before tax adjustment. |
| Cost of Preferred | 8.00% | Dividend divided by preferred price. |
| Estimated WACC | 9.15% | Illustrative sample output only. |
WACC = (E / V × Re) + (D / V × Rd × (1 - T)) + (P / V × Rp)
Where:
When CAPM is used, the calculator estimates equity cost with Re = Rf + Beta × Market Premium. When implied debt is used, it estimates debt cost with Rd = Interest Expense / Debt Principal.
WACC measures the blended required return across a company’s funding sources. It combines debt, equity, and preferred capital costs using their relative weights.
Interest expense is usually tax deductible. That deduction reduces the effective debt cost, so WACC uses after-tax debt cost rather than the headline borrowing rate.
Market values are generally preferred because WACC reflects current investor expectations. Book values can distort capital weights when prices have changed materially.
Use CAPM when you want a structured estimate tied to market risk. It is useful for valuation, planning, and comparing assumptions across different financing cases.
Yes. If the company has no preferred shares, enter zero for preferred market value. The calculator will then weight only debt and equity.
There is no universal target. A good value depends on industry risk, leverage, interest rates, and investor expectations. Lower is not always better if risk is understated.
WACC is commonly used as a discount rate in discounted cash flow models. It helps convert future cash flows into present value estimates.
Scenario testing shows how leverage, tax rate, and expected returns affect financing cost. That helps compare funding strategies before making capital structure decisions.
Important Note: All the Calculators listed in this site are for educational purpose only and we do not guarentee the accuracy of results. Please do consult with other sources as well.