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WACC Calculator
Weight the cost of equity and after-tax cost of debt by their shares of total capital.
WACC Calculator
Enter your numbers and the result updates straight away.
Outputs
Planning estimate only. Verify assumptions before making a financial decision.
A company funded mostly with equity will have a WACC closer to its cost of equity than its debt rate.
How this calculation works
WACC weights cost of equity and after-tax cost of debt by their shares of total market-value capital: E/(D+E)×Re + D/(D+E)×Rd×(1−T). The tax shield is applied only to debt. Market values and current required returns are conceptually preferable to stale book values and historical rates.
How to interpret the result
WACC is a company-level opportunity-cost estimate, not a universal hurdle rate. Match discount rate to the risk and financing assumptions of the cash flows. Small private businesses may require adjustments or a different required-return framework because market inputs are difficult to observe.
Limitations
Results are educational planning estimates. They do not include every tax, legal, accounting, financing, or business-specific consideration and are not professional advice.
Sources and further reading
Formula and example
A company funded mostly with equity will have a WACC closer to its cost of equity than its debt rate.
Common use cases
- Estimate a company discount rate.
- Weight debt and equity financing costs.
- Test capital-structure scenarios.
- Provide an input to enterprise DCF.
- Compare operating return with capital cost.
WACC Calculator FAQ
Should a small-business buyer use WACC?
Not automatically. A buyer’s required return and financing risk may be more relevant than a public-company-style WACC.
Why use market values for debt and equity?
WACC represents the current economic capital mix, which may differ materially from accounting book values.
How is WACC calculated?
The model uses market values for debt and equity when available and applies the tax shield to the stated cost of debt.
How should I interpret the result?
WACC is sensitive to the cost-of-equity estimate and may be unsuitable for a small owner-operated acquisition without adjustment.
Why use after-tax cost of debt?
Interest may create a tax shield, so the standard corporate WACC formula multiplies debt cost by one minus the applicable tax rate. Actual deductibility can be limited.
Should I use book or market values?
WACC is forward-looking and generally uses market-value weights where observable. Private-company values require defensible estimates.
Can WACC discount every project?
No. Projects with materially different operating, country, duration, or financing risk may require a project-specific rate.