Free calculator
WACC calculator (weighted average cost of capital)
Blend cost of equity and after-tax cost of debt using market-value weights: type equity E, debt D, Re and Rd as nominal annual %, and a marginal corporate tax rate T (for the tax shield on debt interest only). We show WACC %, E/(E+D) and D/(E+D), Rd×(1−T), and the two contribution lines so you can match a textbook or spreadsheet check. Not a CAPM/beta engine, not preferred stock, not DCF or live filings—see methodology.
When a WACC line helps
You already have headline capital costs and value weights and want a single blended rate for teaching, sanity checks, or spreadsheet parity—not a substitute for a full DCF workbook.
- Classroom or interview setups: type E, D, Re, Rd, T and compare to the closed-form WACC identity.
- Cross-check a model discount or hurdle discussion: WACC is not the same as IRR on a cash list—pair with the IRR tool when the question is NPV=0 on flows.
- Capital-structure what-if: nudge E/D or Rd and watch weights and after-tax Rd move together.
- Copy the Sheets/Excel patterns below so one row matches this page’s definition.
Weighted average cost of capital in the standard two-source form: equity and debt only, with a tax shield on interest.
Core formula
Let V = E + D. With Re, Rd, and T as decimals in math: WACC = (E/V)·Re + (D/V)·Rd·(1−T). T is a marginal corporate rate applied to the debt leg only in this illustration.
Market-value weights
E and D should be values consistent with how you define cost of equity and cost of debt—usually market caps and traded or economic debt notions, not mixed with inventory “weighted average cost” search results.
What this page is not
CAPM/beta estimation, three-source formulas with preferred stock, personal tax, project-specific adjustments, country coats of debt, segment WACCs, or automated pulls from tickers—build those in your model when you need them.
Treat the output as a mechanical blend on your inputs. For IRR (NPV = 0) on a year-by-year cash list, use the IRR calculator —a different question than a headline WACC. To discount a lump or level payments at your rate, use the present value calculator or TVM for five-variable parity. For PMT/PV/FV with an explicit periodic rate, open the TVM calculator . For time-to-recover an outlay from inflows, use the payback period calculator .
Google Sheets & Excel
English US/UK names below. Put E, D, Re, Rd, and T (tax as percent, same convention as the boxes) in cells, then build weights and WACC explicitly—see cards.
=A2/(A2+B2)Debt weight is =B2/(A2+B2). Require A2+B2 > 0.
=(A2/(A2+B2))*(C2/100)+(B2/(A2+B2))*(D2/100)*(1-E2/100)E/D in A2/B2; Re/Rd as percent numbers like 10 and 6; E2 = tax %. Format the result cell as Percent if you prefer 0.078 style vs 7.8.
Frequently asked questions
What is WACC?
Weighted average cost of capital is a blended annual rate that mixes cost of equity and after-tax cost of debt, each weighted by its share of firm value E + D in the simple two-source story.
What formula do you use?
WACC = (E/(E+D))·Re + (D/(E+D))·Rd·(1−T) with Re and Rd as decimals (divide percent inputs by 100 internally). T is a marginal corporate tax rate on interest in this standard presentation.
Why is there a (1−T) on debt only?
Interest is typically tax-deductible for corporations in many teaching setups, so the after-tax cost of debt is Rd·(1−T). Equity dividends are not modeled with that same shield here—this page stays textbook two-source WACC.
Should E and D be book values or market values?
This tool is framed for market-value weights consistent with discount-rate discussions in corporate finance primers. Book values can diverge; if your policy uses book weights, you can still type them—label the numbers clearly in your own workbook.
Is WACC the same as IRR on a project?
No. IRR finds a rate that zeros NPV on a cash-flow schedule you type. WACC is a capital-structure blend you often compare to IRR or use as a discount input in other work—not computed from the same rows on this page.
Do you calculate cost of equity from beta (CAPM)?
Not in v1. Enter Re you already chose. For CAPM vocabulary and links, see the Lexicon from the related terms list (English) or your own policy model.
What about preferred equity in WACC?
Many curricula add a preferred term with its own cost and weight. This calculator stays common equity + debt only to keep the page fast—extend in a sheet when you need a third source.
Does this run a DCF or NPV?
No. It only computes WACC from five inputs. For DCF vocabulary, see Lexicon; for IRR on flows, use the IRR tool; for PV of lumps/payments, use present value/TVM.
Is this the “weighted average cost” for inventory?
No. That phrase is an inventory accounting topic. This page is capital-structure WACC for financing costs—different idea.
How do I match this in Google Sheets or Excel?
Build E, D, Re, Rd, T in cells, compute E/(E+D) and D/(E+D), then =weightE*(Re/100)+weightD*(Rd/100)*(1-T/100) (adjust if you store rates as decimals already). See the copy cards.
Is this tax, valuation, or investment advice?
No. It is a free educational calculator—not a filing position, not a fairness opinion, and not a substitute for qualified professionals when decisions have money on the line.