WACC Calculator
Calculate WACC (Weighted Average Cost of Capital) from capital structure, cost of equity, cost of debt, and tax rate.
WACC is a common discount rate proxy for DCF valuation. It blends the required return of equity holders and debt holders, adjusting debt for the tax shield.
This calculator computes WACC and the after-tax cost of debt from your inputs (and normalizes weights if they don't sum to 100%).
Prefer an explanation- Read the guide.
WACC explained: how to estimate a discount rate for DCFDCF sensitivity: discount rate vs terminal growth (how to read it)Discount rate: how to choose it for NPV and DCFValuation modeling hub: WACC, DCF, multiples, and equity value
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Tip: you can type commas (e.g., 10,000).
Example
Using the default inputs, the result is:
12.08%
- Equity weight
- 70%
- Debt weight
- 30%
- Cost of equity
- 15%
- Cost of debt
- 7%
- Corporate tax rate
- 25%
How to calculate
- Enter equity and debt weights (or percentages).
- Enter cost of equity, cost of debt, and corporate tax rate.
- Use WACC as a discount rate input for a DCF (with sensitivity analysis).
Formula
WACC = w_exk_e + w_dxk_dx(1 - tax rate)
- Debt benefit is modeled via the interest tax shield (after-tax cost of debt).
- Weights should ideally reflect market value capital structure.
- WACC is an estimate; use sensitivity analysis.
FAQ
Should I use WACC as my DCF discount rate-
Often yes as a starting point for valuing the overall firm. For projects with different risk than the core business, use a risk-adjusted discount rate instead of the company WACC.
Why do we adjust debt for taxes-
Interest expense is often tax deductible, so debt financing has a tax shield. Using after-tax cost of debt reflects that benefit in WACC.
Common mistakes
- Using WACC for projects with different risk than the overall business.
- Mixing market-value weights with book-value costs (inconsistent inputs).
- Treating WACC as precise; it's an estimate that should be scenario tested.
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Quick checks
- Use consistent time units (monthly vs annual) when entering rates and cash flows.
- Run a sensitivity check on the input that drives the result most (often discount rate or growth).
- Treat the output as a decision aid, not a prediction; validate assumptions with reality.