Corporate finance / Rebuilt
Weighted average cost of capital
Explicit debt and equity weighting using their market values.
Your assumptions
01 / 02Your scenario
02 / 02WACC
Initial example. Change assumptions to explore a scenario.
Equity weight—
Debt weight—
After-tax debt cost—
Contributions to WACC (percentage points)
Result breakdown (%)
| Component | Weight (%) | Cost (%) | Contribution (points) |
|---|
The method, not a black box
Use market values of interest-bearing debt and equity. Do not subtract cash from the debt weight. The tax shield is assumed usable.
WACC = E/(E+D) × kₑ + D/(E+D) × kᵈ × (1−T).
Reference: CFA Institute — WACC ↗
What the result does not tell you
Tax rate is an assumption, not an automatic statutory rate. Funding structure, risk and actual interest deductibility need separate assessment.
Starting values are examples. No result guarantees a return, credit decision or tax treatment.