liminfoWACC Calculator
Free web tool: WACC Calculator
WACC
9.52%
Equity Weight
70.00%
Debt Weight
30.00%
Equity Contribution
8.40%
Debt Contribution
1.13%
About WACC Calculator
The WACC Calculator is a free, browser-based finance tool that computes the Weighted Average Cost of Capital (WACC) — the blended rate a company must earn on its assets to satisfy both equity holders and debt holders. It takes equity market value, debt market value, cost of equity, cost of debt, and corporate tax rate as inputs and outputs the overall WACC along with each component's weight and contribution. The built-in tax shield adjustment applies the after-tax cost of debt formula (Rd × (1 − T)) to correctly account for interest deductibility.
A second tab implements the Capital Asset Pricing Model (CAPM) to help you derive the cost of equity from first principles. By entering the risk-free rate, the equity beta, and the equity risk premium (ERP), the tool applies the CAPM formula (Re = Rf + β × ERP) and instantly returns the expected return on equity. This is commonly used to feed the cost-of-equity input in WACC calculations, making both tabs complementary when performing discounted cash flow (DCF) analysis or capital budgeting work.
Finance professionals, investment analysts, MBA students, and corporate treasurers use WACC as the discount rate in DCF models and as a hurdle rate for evaluating capital projects. Having an accurate, real-time WACC calculator removes the need for error-prone spreadsheet setups. All calculations run entirely in your browser using JavaScript — no data is transmitted to any server, ensuring privacy and instant feedback as you adjust inputs.
Key Features
- WACC calculation using equity value, debt value, cost of equity, cost of debt, and tax rate
- Automatic after-tax debt cost adjustment with the tax shield formula Rd × (1 − T)
- Separate CAPM tab to derive cost of equity from risk-free rate, beta, and equity risk premium
- Component breakdown showing equity weight, debt weight, equity contribution, and debt contribution
- Real-time recalculation — results update instantly as you change any input value
- Handles any capital structure by accepting absolute market values for equity and debt
- Displays WACC as a percentage with two decimal precision alongside all sub-components
- 100% client-side processing — no data ever leaves your browser, completely private
Frequently Asked Questions
What is WACC?
WACC (Weighted Average Cost of Capital) is the average rate a company is expected to pay to all its security holders to finance its assets. It weights the cost of equity and the after-tax cost of debt by their respective proportions in the total capital structure. WACC is commonly used as the discount rate in DCF (Discounted Cash Flow) valuations.
How is WACC calculated?
WACC = (E/V) × Re + (D/V) × Rd × (1 − T), where E is the market value of equity, D is the market value of debt, V = E + D is total capital, Re is the cost of equity, Rd is the cost of debt (pre-tax), and T is the corporate tax rate. The (1 − T) factor captures the interest tax shield since interest expense is tax-deductible.
What is CAPM and how does it relate to WACC?
CAPM (Capital Asset Pricing Model) estimates the expected return on equity as Re = Rf + β × ERP, where Rf is the risk-free rate, β (beta) measures the stock's sensitivity to market movements, and ERP is the equity risk premium. This Re value is then used as the cost of equity input in the WACC formula, linking the two models.
What does beta represent in CAPM?
Beta measures a stock's systematic risk relative to the overall market. A beta of 1.0 means the stock moves in line with the market. A beta above 1.0 indicates higher volatility and risk (and therefore a higher required return), while a beta below 1.0 suggests less sensitivity to market swings.
Why does WACC use after-tax cost of debt?
Interest payments on debt are tax-deductible, which effectively reduces the company's tax burden. The after-tax cost of debt is Rd × (1 − T). For example, if the pre-tax cost of debt is 5% and the tax rate is 25%, the effective after-tax cost is only 3.75%. This tax shield makes debt financing cheaper than equity and is a key reason companies use leverage.
Should I use book value or market value for equity and debt?
WACC calculations should use market values, not book values. Market value of equity is the current share price multiplied by shares outstanding (market cap). Market value of debt can be estimated using the present value of future debt payments. Using book values distorts the weighting and gives an inaccurate WACC, especially for companies whose assets have appreciated significantly.
What is a typical WACC for a company?
WACC varies significantly by industry, company size, and market conditions. Mature large-cap companies in stable industries might have WACCs of 7–9%, while smaller high-growth or capital-intensive companies might have WACCs of 12–15% or higher. The WACC also changes over time as interest rates, equity risk premiums, and capital structure evolve.
How is WACC used in practice?
WACC is most commonly used as the discount rate in Discounted Cash Flow (DCF) valuation models — future free cash flows are discounted back to present value using WACC. It is also used as a hurdle rate: companies reject projects whose expected returns fall below the WACC, since those projects would destroy shareholder value rather than create it.