WACC Calculator
About WACC Calculator
The WACC Calculator is used to calculate the weighted average cost of capital (WACC).
WACC Definition
In finance, the weighted average cost of capital, or WACC, is the rate that a company is expected to pay on average to all its security holders to finance its assets. The WACC is the minimum acceptable return that a company must earn on an existing asset base to satisfy its creditors, owners, and other providers of capital, or they will invest elsewhere.
Formula
The following is the WACC calculation formula:
WACC = E/V × Re + D/V × Rd × (1 - Tc)
where:
Re = cost of equity
Rd = cost of debt
E = market value of the firm's equity
D = market value of the firm's debt
V = E + D = firm value
E/V = percentage of financing that is equity
D/V = percentage of financing that is debt
Tc = corporate tax rate
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