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WACC Calculator
Determine a company's discount rate using the Capital Asset Pricing Model (CAPM) and target capital structure weights.
Cost of Equity (CAPM)
Cost of Equity (Ke):
Cost of Debt & Weights
After-Tax Cost of Debt:
Weighted Average Cost of Capital
Weight of Equity used:
The Math
Cost of Equity (CAPM):
Ke = RiskFreeRate + (Beta * EquityRiskPremium)
After-Tax Cost of Debt:
Kd = PreTaxDebtRate * (1 - TaxRate)
WACC:
WACC = (%Equity * Ke) + (%Debt * Kd)
Notice that because debt is tax-deductible, increasing the debt weight usually lowers the WACC (up to a point of distress).