Weighted Average Cost of Capital Calculator

About this calculator

WACC blends the cost of a company's two main funding sources, weighted by how much of the capital structure each represents: WACC = (E/V × cost of equity) + (D/V × cost of debt × (1 − tax rate)), where E and D are the market values of equity and debt and V is their sum. The after-tax adjustment on debt reflects the fact that interest payments are tax-deductible, making debt cheaper on an after-tax basis than its stated interest rate suggests.

Corporate finance teams use WACC as the discount rate in discounted cash flow valuations and as the minimum hurdle rate a new project's expected return must clear to be worth pursuing — a project with an IRR below WACC destroys value even if it is nominally profitable, because it earns less than what the capital deployed actually costs the company.

This calculator takes your equity and debt values, cost of equity, cost of debt and corporate tax rate and returns the weighted average cost of capital, so you can see the true blended cost of the capital funding your business.