Quick answer
WACC = E/V × Re + D/V × Rd × (1 − T), where V = E + D. With equity of $600,000 at a 10% cost, debt of $400,000 at 5% and a 25% tax rate, WACC is 6% + 1.5% = 7.5%.
Enter the market values of equity and debt, the costs of each and the tax rate. The calculator returns the weighted average cost of capital.
Related tools: Investment Calculator: Project investment growth from a rate of return you choose. Financial Calculator: Time-value-of-money solver for N, rate, present value, payment or future value. IRR Calculator: Internal rate of return of an investment from its yearly cash flows.
How to use the WACC Calculator
- Enter market value of equity ($) (above 0).
- Enter market value of debt ($) (0 or more).
- Enter cost of equity (%) (between 0 and 100).
- Enter cost of debt (%) (between 0 and 100).
- Enter tax rate (%) (between 0 and 100).
- Press Calculate to see the result, and use Reset to start again.
| Input | What to enter | Allowed values |
|---|---|---|
| Market value of equity | A number, in $ | > 0 |
| Market value of debt | A number, in $ | ≥ 0 |
| Cost of equity | A number, in % | ≥ 0, ≤ 100 |
| Cost of debt | A number, in % | ≥ 0, ≤ 100 |
| Tax rate | A number, in % | ≥ 0, ≤ 100 |
Formula and method
Formula
WACC = E/V × Re + D/V × Rd × (1 − T), V = E + D
IEEE-754 double precision; money shown to cents, rates to 4 decimals. Results are estimates, not financial advice.
Weights are market values of equity and debt.
Worked examples
These examples are verified: each one is an automated test case that the live calculator must reproduce exactly.
Example 1
Inputs: Market value of equity = 600000; Market value of debt = 400000; Cost of equity = 10; Cost of debt = 5; Tax rate = 25.
| Result | Value |
|---|---|
| WACC | 7.5% |
Example 2
Inputs: Market value of equity = 100; Market value of debt = 0; Cost of equity = 8; Cost of debt = 4; Tax rate = 30.
| Result | Value |
|---|---|
| WACC | 8% |
The first line is the headline result (wACC). IEEE-754 double precision; money shown to cents, rates to 4 decimals. Results are estimates, not financial advice.
Why debt is cheaper
Interest is tax deductible, so the after-tax cost of debt is 5% × 0.75 = 3.75%. Debt is also cheaper than equity because lenders have priority. Adding debt lowers WACC until the risk of distress outweighs the tax benefit.
Use
WACC is the usual discount rate for discounted cash flow valuations and the hurdle rate for projects. With no debt, WACC equals the cost of equity. Use market values, not book values.
How the result changes with market value of equity
Holding every other input at the first worked example, this table changes only market value of equity. It shows how sensitive the answer is to that one value; each row was produced by running this calculator.
| Market value of equity | WACC |
|---|---|
| 300000 | 6.4286% |
| 600000 | 7.5% |
| 1200000 | 8.4375% |
| 2400000 | 9.1071% |
What happens with invalid input
These messages are produced by the calculator itself, so you know what to fix.
- Market value of equity: entering "0" shows "Market value of equity must be greater than 0." beside that field and no result.
- Tax rate: entering "125" shows "Tax rate must be at most 100." beside that field and no result.
Choosing between the WACC Calculator and similar calculators
Each row shows what a related calculator on this site asks for and what it returns, so you can pick the one that matches your question.
| Calculator | You enter | It returns |
|---|---|---|
| [Investment Calculator](/finance/investment-calculator/) | initial amount, annual interest rate and years | Projected value |
| [Financial Calculator](/finance/financial-calculator/) | solve for, periods per year and payments | Future value (FV) |
| [IRR Calculator](/finance/irr-calculator/) | initial investment and cash flows | IRR |
| [CAGR Calculator](/finance/cagr-calculator/) | beginning value, ending value and years | CAGR |
| [Present Value Calculator](/finance/present-value-calculator/) | future value, annual discount rate and years | Present value |
Background: interest, saving and investing
A nominal rate (APR) does not include the effect of compounding; the annual percentage yield (APY) does: APY = (1 + r/n)^n − 1. A 5% nominal rate compounded annually is 5.000%, semi-annually about 5.063%, quarterly about 5.095% and monthly about 5.116%, so more frequent compounding helps, but with diminishing returns.
The rate you enter in a projection is an assumption, not a promise: real returns vary and can be negative. Fees and taxes are not modelled unless the page says so.
Assumptions and limitations
- No debt gives WACC = cost of equity
Results are estimates for planning, not financial advice. Lender terms, fees, taxes and rounding rules can change real figures, so confirm important numbers with your lender or a licensed adviser.
If a required value is empty, not a number, or outside its allowed range, the form marks that field with a message and shows no result instead of a misleading number. The automated checks deliberately try invalid entries for market value of equity and tax rate to confirm this.
Frequently asked questions
How do I estimate the cost of equity?
Often with CAPM: cost of equity = risk-free rate + beta × market risk premium.
Is WACC the same as interest rate?
No. WACC blends the cost of equity and the after-tax cost of debt, so it's usually higher than the loan interest rate.
What affects WACC?
Capital structure, rates and risk.
What does the WACC Calculator calculate?
Weighted average cost of capital. It returns WACC.
What formula does the WACC Calculator use?
WACC = E/V × Re + D/V × Rd × (1 − T), V = E + D. Weights are market values of equity and debt.
What do I need to enter in the wACC Calculator?
You enter Market value of equity ($), Market value of debt ($), Cost of equity (%), Cost of debt (%) and Tax rate (%).
How is the result rounded or limited?
IEEE-754 double precision; money shown to cents, rates to 4 decimals. Results are estimates, not financial advice. No debt gives WACC = cost of equity.
What is an example of a wACC result?
With market value of equity 600000, market value of debt 400000, cost of equity 10, cost of debt 5 and tax rate 25, the wACC is 7.5%.
Can I rely on this calculator for a decision?
Results are estimates for planning, not financial advice. Lender terms, fees, taxes and rounding rules can change real figures, so confirm important numbers with your lender or a licensed adviser. For this calculator in particular: No debt gives WACC = cost of equity.
Related calculators
- Investment Calculator — Project investment growth from a rate of return you choose.
- Financial Calculator — Time-value-of-money solver for N, rate, present value, payment or future value.
- IRR Calculator — Internal rate of return of an investment from its yearly cash flows.
- CAGR Calculator — Compound annual growth rate between two values.
- Present Value Calculator — Today's value of a future amount at a given discount rate.
- Mutual Fund Calculator — Growth of a fund investment after its expense ratio.
Sources
- Standard time-value-of-money relations (e.g. Brealey, Myers & Allen, Principles of Corporate Finance)
Content last reviewed 2026-11-04. Formulas and worked examples are checked by automated tests against independently computed values.