WACC Calculator: calculate wacc for your business. Formula, benchmarks, and practical tips included.
WACC = (E/V × Re) + (D/V × Rd × (1 − Tc))
where E = market value of equity, D = market value of debt, V = E + D (total capital), Re = cost of equity, Rd = cost of debt, Tc = corporate tax rate.
Cost of equity (CAPM) = Rf + β × (Rm − Rf)
where Rf = risk-free rate, β = equity beta, (Rm − Rf) = equity risk premium.
Worked example: Equity 70% of capital, cost of equity 11%. Debt 30%, pre-tax cost 5%, tax rate 25%. WACC = 0.70 × 11% + 0.30 × 5% × (1 − 0.25) = 7.70% + 1.125% = 8.825%. Any investment returning above 8.825% creates value; below 8.825% destroys it.