Cost of Capital Calculator: calculate cost of capital for your business. Formula, benchmarks, and practical tips included.
Economic profit = (ROIC − WACC) × Invested capital
NPV = Σ [Cash flowₜ ÷ (1 + WACC)ᵗ] − Initial investment
Worked example: Project requires 500,000 investment. Expected annual cash flows 120,000 for 6 years. WACC 9%. NPV = PV of 120,000/year for 6 years at 9% − 500,000 = 538,300 − 500,000 = 38,300 positive NPV. The project creates value and should be accepted.