Weighted Average Cost of Capital Calculator

How it is calculated

Enter the market value of equity (E) and of debt (D) in the same currency and unit, the cost of equity and cost of debt as yearly percentages, and the corporate tax rate. The tool computes V = E + D, the weights E/V and D/V, and the after-tax cost of debt Rd × (1 − tax%). Then WACC = E/V × Re + D/V × Rd × (1 − tax%), shown as a percentage. If the tax rate is left empty it is taken as 0, so debt gets no tax shield. Tax must be 0 to under 100, none of the values can be negative, and E + D must be above zero. The cost of equity is an estimate you supply (for example from CAPM), not something the tool derives. Tax rules differ between countries.

Common mistakes

• Using book values of equity instead of market value: the weights should reflect what the capital is worth today.
• Leaving the tax rate empty and then comparing the result with an after-tax figure: empty means 0 % tax, so the debt looks more expensive.
• Entering the pre-tax cost of debt as if it were already after tax and then applying tax a second time.
• Entering cost of equity as 0.11 instead of 11: the value is read as 0.11 %.
• Mixing units, such as equity in millions and debt in thousands, which distorts the weights.