How it works
WACC = equity weight × cost of equity + debt weight × cost of debt × (1−tax rate).
Input definitions
- Market value of equity
- Enter the value in the labeled unit.
- Market value of debt
- Enter the value in the labeled unit.
- Cost of equity (%)
- Enter the value in the labeled unit.
- Pre-tax cost of debt (%)
- Enter the value in the labeled unit.
- Applicable corporate tax rate (%)
- Enter the value in the labeled unit.
A worked example
- Market value of equity
- 600
- Market value of debt
- 400
- Cost of equity (%)
- 10
- Pre-tax cost of debt (%)
- 5
- Applicable corporate tax rate (%)
- 20
Assumptions & limits
Planning model using the rates, cash flows and periods entered. Examples are illustrative, not market quotes or personalised financial advice. Taxes, inflation and transaction costs are excluded unless explicitly entered.
Sources & review
Maintained by AnsRio. Methods and examples use automated checks; this does not imply independent professional certification.
Method updated 2026-10-18. Content checked against the stated method and examples. Our verification approach.
Common questions
Should book values or market values be used?
Market-value financing weights are the usual valuation convention. The tax shield also assumes interest deductibility applies.
How does Weighted average cost of capital work?
WACC = equity weight × cost of equity + debt weight × cost of debt × (1−tax rate).
What should I check before using Weighted average cost of capital?
Planning model using the rates, cash flows and periods entered. Examples are illustrative, not market quotes or personalised financial advice. Taxes, inflation and transaction costs are excluded unless explicitly entered.