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How to Calculate WACC

Calculate Weighted Average Cost of Capital for a company's capital structure.

The Formula

WACC = (E/V)*Re + (D/V)*Rd*(1-T)

The wacc formula uses the mathematical relationship: WACC = (E/V)*Re + (D/V)*Rd*(1-T). Each variable in the formula represents a measurable quantity that affects the final result.

Step-by-Step Method

  1. 1Identify all input values needed for the wacc calculation.
  2. 2Substitute your known values into the formula: WACC = (E/V)*Re + (D/V)*Rd*(1-T).
  3. 3Perform the arithmetic operations in the correct order (PEMDAS/BODMAS).
  4. 4Check that your result has the correct units and is within a reasonable range.
  5. 5Verify using the interactive WACC Calculator to confirm your answer.

Related Topics

WACCcost of capitalequitydebtvaluation

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