Calculate the Weighted Average Cost of Capital (WACC) to determine a company's cost of financing its assets.
Capital Structure & Costs
WACC Result
WACC7.98%Average Cost of Capital
Equity Weight66.7%
Debt Weight33.3%
Capital Structure Weights
About this calculator
Overview
Calculate the Weighted Average Cost of Capital (WACC) to determine a company's cost of financing its assets.
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Pro Tips
What is WACC?: WACC is the average rate a company expects to pay to finance its assets. It is weighted based on the proportion of debt and equity in the company's capital structure.
Why is WACC important?: It is used as a 'hurdle rate' for new projects. If a project's expected return is lower than the WACC, it may not be worth pursuing because it costs more to fund than it earns.
Why do we multiply the cost of debt by (1 - Tax Rate)?: Because interest payments on debt are usually tax-deductible. This makes the effective cost of debt cheaper than the nominal interest rate.
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Fun Facts
"The 'Weighted' part of WACC means that if a company is 90% equity-funded, the cost of equity will have 9x more influence on the final WACC than the cost of debt."
"Most publicly traded companies have a WACC between 5% and 12%, though this varies wildly by industry."
"Venture-backed startups often have a much higher WACC because their 'Cost of Equity' is massive due to the high risk involved."
