WACC Calculator
Weight the cost of equity and the cost of debt by how much of each you use. With 60% equity at 9%, 40% debt at 5% and a 22% tax rate, interest is deductible, so the debt leg falls to 5 × 0.78 = 3.9%. That gives 0.6 × 9 + 0.4 × 3.9 = 6.96%. This 6.96% is what usually goes in the discount-rate slot of an NPV.
Your numbers
WACC
6.96%
After-tax cost of debt
3.9%
Debt weight
40%
Formula
WACC = Equity weight ÷ 100 × Cost of equity + Debt weight ÷ 100 × Cost of debt × (1 − Tax rate ÷ 100)
The tax shield applies to debt only — dividends are not deductible, so no (1 − tax) multiplies the cost of equity. Weights are meant to be market values, not book values, so a rising share price quietly cuts the debt weight and lifts WACC. The cost of equity is an estimate rather than an observed number, so what you put there is half the answer.
What to enter
| Input | Default | Accepted range |
|---|---|---|
| Equity weight (%)The share funded by equity; the rest becomes the debt weight. | 60 | 0 ~ 100 |
| Cost of equity (%)The return shareholders demand — an estimate, not an observed number. | 9 | 0 ~ 60 |
| Cost of debt (%)The rate paid on borrowings, before the tax shield is applied. | 5 | 0 ~ 60 |
| Tax rate (%)The tax rate that applies; it varies by country and item. | 22 | 0 ~ 60 |
Step by step
Quick reference table
Results when only Equity weight (%) changes and everything else stays put.
| Equity weight (%) | WACC (%) | After-tax cost of debt (%) | Debt weight (%) |
|---|---|---|---|
| 30 | 5.43 | 3.9 | 70 |
| 45 | 6.195 | 3.9 | 55 |
| 60 | 6.96 | 3.9 | 40 |
| 90 | 8.49 | 3.9 | 10 |
| 100 | 9 | 3.9 | 0 |
What each result means
| Result | At default values |
|---|---|
| WACC (%)Equity and debt costs weighted by how much of each you use — the usual NPV discount rate. | 6.96 |
| After-tax cost of debt (%)The cost of debt after deductible interest lowers it; it applies to debt only. | 3.9 |
| Debt weight (%)The share funded by debt — whatever the equity weight leaves. | 40 |
Common mistakes
The tax shield applies to debt only — dividends are not deductible, so no (1 − tax) multiplies the cost of equity. Weights are meant to be market values, not book values, so a rising share price quietly cuts the debt weight and lifts WACC. The cost of equity is an estimate rather than an observed number, so what you put there is half the answer.
Glossary
- Equity weight
- The share funded by equity; the rest becomes the debt weight.
- Cost of equity
- The return shareholders demand — an estimate, not an observed number.
- Cost of debt
- The rate paid on borrowings, before the tax shield is applied.
- Tax rate
- The tax rate that applies; it varies by country and item.
- WACC
- Equity and debt costs weighted by how much of each you use — the usual NPV discount rate.
- After-tax cost of debt
- The cost of debt after deductible interest lowers it; it applies to debt only.
- Debt weight
- The share funded by debt — whatever the equity weight leaves.
Frequently asked questions
Q. How is WACC Calculator calculated?
WACC = Equity weight ÷ 100 × Cost of equity + Debt weight ÷ 100 × Cost of debt × (1 − Tax rate ÷ 100) — Weight the cost of equity and the cost of debt by how much of each you use. With 60% equity at 9%, 40% debt at 5% and a 22% tax rate, interest is deductible, so the debt leg falls to 5 × 0.78 = 3.9%. That gives 0.6 × 9 + 0.4 × 3.9 = 6.96%. This 6.96% is what usually goes in the discount-rate slot of an NPV.
Q. Can you walk through an example?
With Equity weight 60%, Cost of equity 9%, Cost of debt 5%, Tax rate 22%, the answer is WACC 6.96%.
Q. What do I need to enter?
Enter Equity weight, Cost of equity, Cost of debt, Tax rate. The result recalculates as you type, and an empty box counts as zero.
Q. How much does the answer move if I change a number?
Changing only Equity weight (%) moves the answer to Equity weight (%) 30 → WACC (%) 5.43 and Equity weight (%) 100 → WACC (%) 9. The table below lays out five steps.
Q. How are the numbers rounded?
Money is shown to the nearest whole unit, percentages to one decimal place and everything else to two. What you see is rounded; the calculation itself carries the unrounded value forward.
Q. Anything to watch out for?
The tax shield applies to debt only — dividends are not deductible, so no (1 − tax) multiplies the cost of equity. Weights are meant to be market values, not book values, so a rising share price quietly cuts the debt weight and lifts WACC. The cost of equity is an estimate rather than an observed number, so what you put there is half the answer.
Related calculators
Tax rates and interest conventions differ by country and product — check your contract for real transactions.