Weighted Average Cost of Capital Calculator

✖The market value of equity is the total dollar market value of all of a company's outstanding shares.ⓘ Market value of the firm’s equity [E]			+10% -10%
✖Firm Value is a measure of a company's total value, often used as a more comprehensive alternative to equity market capitalization.ⓘ Firm Value [V]			+10% -10%
✖The cost of equity is the return a firm theoretically pays to its equity investors, i.e., shareholders, to compensate for the risk they undertake by investing their capital.ⓘ Cost of Equity [Re]			+10% -10%
✖The Market Value of the Firm’s Debt is the total dollar debt value of all of a firm such as bonds and loans.ⓘ Market Value of the Firm’s Debt [MV]			+10% -10%
✖The cost of debt is the interest a company pays on its borrowings.ⓘ Cost of Debt [Rd]			+10% -10%
✖The corporate tax rate is the rate at which levy is placed on the profit of a firm to raise taxes.ⓘ Corporate Tax Rate [Tc]			+10% -10%

✖The weighted average cost of capital (WACC) is the minimum return that a company is supposed to give on an average to satisfy its entire security proprietors to finance its assets.ⓘ Weighted Average Cost of Capital [WACC]

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Formula

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Weighted Average Cost of Capital

Formula

`"WACC" = (("E"/"V")*"Re")+((("MV"/"V")*"Rd")*(1-"Tc"))`

Example

`"-160"=(("500"/"500000")*"200000")+((("2000"/"500000")*"10000")*(1-"10"))`

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Weighted Average Cost of Capital Solution

STEP 0: Pre-Calculation Summary

Formula Used

Weighted average cost of capital = ((Market value of the firm’s equity/Firm Value)*Cost of Equity)+(((Market Value of the Firm’s Debt/Firm Value)*Cost of Debt)*(1-Corporate Tax Rate))
WACC = ((E/V)*Re)+(((MV/V)*Rd)*(1-Tc))
This formula uses 7 Variables

Variables Used

Weighted average cost of capital - The weighted average cost of capital (WACC) is the minimum return that a company is supposed to give on an average to satisfy its entire security proprietors to finance its assets.
Market value of the firm’s equity - The market value of equity is the total dollar market value of all of a company's outstanding shares.
Firm Value - Firm Value is a measure of a company's total value, often used as a more comprehensive alternative to equity market capitalization.
Cost of Equity - The cost of equity is the return a firm theoretically pays to its equity investors, i.e., shareholders, to compensate for the risk they undertake by investing their capital.
Market Value of the Firm’s Debt - The Market Value of the Firm’s Debt is the total dollar debt value of all of a firm such as bonds and loans.
Cost of Debt - The cost of debt is the interest a company pays on its borrowings.
Corporate Tax Rate - The corporate tax rate is the rate at which levy is placed on the profit of a firm to raise taxes.

STEP 1: Convert Input(s) to Base Unit

Market value of the firm’s equity: 500 --> No Conversion Required
Firm Value: 500000 --> No Conversion Required
Cost of Equity: 200000 --> No Conversion Required
Market Value of the Firm’s Debt: 2000 --> No Conversion Required
Cost of Debt: 10000 --> No Conversion Required
Corporate Tax Rate: 10 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

WACC = ((E/V)*Re)+(((MV/V)*Rd)*(1-Tc)) --> ((500/500000)*200000)+(((2000/500000)*10000)*(1-10))

Evaluating ... ...

WACC = -160

STEP 3: Convert Result to Output's Unit

-160 --> No Conversion Required

FINAL ANSWER

-160 <-- Weighted average cost of capital

(Calculation completed in 00.004 seconds)

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< 22 Business Calculators

Macaulay Duration

Go Macaulay Duration = sum(x,1,5,Cash Flow Number,((Cash Flow/(1+Yield to Maturity (YTM)/Compounding Periods))^Cash Flow Number))*(Time in Years/Present Value)

Weighted Average Cost of Capital

Go Weighted average cost of capital = ((Market value of the firm’s equity/Firm Value)*Cost of Equity)+(((Market Value of the Firm’s Debt/Firm Value)*Cost of Debt)*(1-Corporate Tax Rate))

Total Inventory Cost

Go Total Inventory Cost = Carrying cost per unit per year*(Quantity of Each Order/2)+Fixed cost per order*(Demand in units per year/Quantity of Each Order)

Acid Test Ratio

Go Acid Test Ratio = (Cash+Accounts Receivable+Short Term Investments)/Current Liabilities

Economic Order Quantity

Go Economic Order Quantity = ((2*Fixed cost per order*Demand in units per year)/Carrying cost per unit per year)*(1/2)

Return on Capital Employed

Go Return on capital employed = (Earnings Before Interest and Taxes/(Total Assets-Current Liabilities))*100

Diluted Earnings per Share

Go Diluted Earnings per Share = Net Income/(Average Shares+Other Convertible Securities)

Inventory Shrinkage

Go Inventory Shrinkage = ((Recorded Inventory-Actual Inventory)/Recorded Inventory)*100

Modified Duration

Go Modified Duration = Macaulay Duration/(1+Yield to Maturity (YTM)/Coupon Periods)

Target Inventory Investment

Go Target Inventory Investment = Projected Annual Cost of Goods Sold from Stock Sales/Target Inventory Turnover

Retention Ratio

Go Retention Ratio = (Net Income-Dividend)/Net Income

Contribution Margin per Unit

Go Contribution Margin per Unit = Sales Price per Unit-Variable Cost per Unit

Operating Expense Ratio

Go Operating Expense Ratio = (Operating Expense/Gross Operating Income)*100

Break-Even Point

Go Break Even Point = Fixed Costs/Contribution Margin per Unit

Estimated Earnings

Go Estimated Earnings = Forecasted Sales-Forecasted Expense

Debt Coverage Ratio

Go Debt Coverage Ratio = Net Operating Income/Debt Service

Dividends Per Share

Go Dividends Per Share = Total Dividends/Number of Shares

Solvency Ratio

Go Solvency Ratio = (Shareholders Fund*100)/Total Assets

Estimate at completion

Go Estimate at Completion = Actual Cost+Bottom up ETC

Percentage off

Go Percentage Off = 1-(Selling Price/Original Price)

Preferred Stock

Go Preferred Stock = Dividend/Discount Percentage

Days in Inventory

Go Days in Inventory = 365/Inventory Turnover

Weighted Average Cost of Capital Formula

How to Calculate Weighted Average Cost of Capital?

Weighted Average Cost of Capital calculator uses Weighted average cost of capital = ((Market value of the firm’s equity/Firm Value)*Cost of Equity)+(((Market Value of the Firm’s Debt/Firm Value)*Cost of Debt)*(1-Corporate Tax Rate)) to calculate the Weighted average cost of capital, The Weighted Average Cost of Capital (WACC) is the minimum return that a company is supposed to give on average to satisfy its entire security proprietors to finance its assets. Weighted average cost of capital is denoted by WACC symbol.

How to calculate Weighted Average Cost of Capital using this online calculator? To use this online calculator for Weighted Average Cost of Capital, enter Market value of the firm’s equity (E), Firm Value (V), Cost of Equity (Re), Market Value of the Firm’s Debt (MV), Cost of Debt (Rd) & Corporate Tax Rate (Tc) and hit the calculate button. Here is how the Weighted Average Cost of Capital calculation can be explained with given input values -> -160 = ((500/500000)*200000)+(((2000/500000)*10000)*(1-10)).

FAQ

What is Weighted Average Cost of Capital?

The Weighted Average Cost of Capital (WACC) is the minimum return that a company is supposed to give on average to satisfy its entire security proprietors to finance its assets and is represented as WACC = ((E/V)*Re)+(((MV/V)*Rd)*(1-Tc)) or Weighted average cost of capital = ((Market value of the firm’s equity/Firm Value)*Cost of Equity)+(((Market Value of the Firm’s Debt/Firm Value)*Cost of Debt)*(1-Corporate Tax Rate)). The market value of equity is the total dollar market value of all of a company's outstanding shares, Firm Value is a measure of a company's total value, often used as a more comprehensive alternative to equity market capitalization, The cost of equity is the return a firm theoretically pays to its equity investors, i.e., shareholders, to compensate for the risk they undertake by investing their capital, The Market Value of the Firm’s Debt is the total dollar debt value of all of a firm such as bonds and loans, The cost of debt is the interest a company pays on its borrowings & The corporate tax rate is the rate at which levy is placed on the profit of a firm to raise taxes.

How to calculate Weighted Average Cost of Capital?

The Weighted Average Cost of Capital (WACC) is the minimum return that a company is supposed to give on average to satisfy its entire security proprietors to finance its assets is calculated using Weighted average cost of capital = ((Market value of the firm’s equity/Firm Value)*Cost of Equity)+(((Market Value of the Firm’s Debt/Firm Value)*Cost of Debt)*(1-Corporate Tax Rate)). To calculate Weighted Average Cost of Capital, you need Market value of the firm’s equity (E), Firm Value (V), Cost of Equity (Re), Market Value of the Firm’s Debt (MV), Cost of Debt (Rd) & Corporate Tax Rate (Tc). With our tool, you need to enter the respective value for Market value of the firm’s equity, Firm Value, Cost of Equity, Market Value of the Firm’s Debt, Cost of Debt & Corporate Tax Rate and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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