Money Tools

Weighted Average Cost of Capital Calculator

Estimate weighted average cost of capital from debt, equity, their costs, and tax rate.

Updated April 16, 2026
Free online tool
Planning and research use

Why this page exists

Capital costs become easier to compare when debt and equity are blended into one weighted financing rate instead of being reviewed as separate inputs. This calculator helps visitors estimate weighted average cost of capital from market debt, market equity, cost of debt, cost of equity, and tax rate.

Interactive tool

Run the estimate

Enter your numbers and read the result first, then use the sections below to understand what affects the outcome.

Calculator

Weighted average cost of capital calculator

Estimate weighted average cost of capital from debt, equity, their costs, and the tax rate.

Result

8.79%

Estimated weighted average cost of capital using debt weight times after-tax cost of debt plus equity weight times cost of equity.

Weighted average cost of capital8.79%

Debt weight30.00%

Equity weight70.00%

After-tax cost of debt used4.10%

Cost of equity used10.80%

$18,000,000.00 of debt and $42,000,000.00 of equity gives weights near 30.00% and 70.00% in this capital mix.
A cost of debt of 5.40% with a tax rate of 24.00% gives an after-tax debt cost near 4.10%.
Use the result as a planning estimate only, because capital structure, required return assumptions, and tax treatment can all shift WACC meaningfully.

This is a planning and valuation estimate, not investment advice. The result depends heavily on the debt, equity, and cost assumptions used.

Planning note

Last updated April 16, 2026. Use this tool to compare scenarios and plan ahead, then confirm important details with the lender, employer, insurer, contractor, or other qualified provider involved in the final decision.

How it works

What the calculator is doing

Enter the market value of debt, market value of equity, cost of debt, cost of equity, and tax rate.

The calculator finds the debt and equity weights from total capital and applies the after-tax debt cost.

It shows estimated WACC plus the debt weight, equity weight, after-tax debt cost, and cost of equity used.

Understanding your result

This is a planning and valuation estimate only. It can help frame capital cost assumptions for valuation work, but real capital structures, tax treatment, and required returns can change over time.

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Examples

Ways people use this tool

Example scenarios help turn a quick estimate into a more useful comparison or planning step.

Check a discount-rate assumption

A quick WACC estimate can help test whether a valuation model is using a financing cost that feels reasonable.

Compare two capital structures

Changing the debt and equity mix can show how much the weighted cost shifts when financing assumptions change.

Use it with DCF and return tools

WACC often makes more sense when reviewed beside discounted cash flow, NPV, and return-on-capital measures.

When to use it

Good times to run this calculator

Use this when you want a quick blended capital-cost estimate for valuation, hurdle-rate, or project-screening work.

It is especially useful when debt and equity funding are both part of the capital structure and you want one combined rate.

Assumptions and limitations

The estimate assumes the debt and equity values entered reasonably represent the target capital structure.

It does not model preferred shares, changing capital mixes over time, or more advanced required-return adjustments.

Common mistakes

Avoid the usual input mistakes

Using book values instead of the intended market values can change the weights materially.

Treating a rough WACC estimate as precise enough for every valuation decision can overstate the certainty of the result.

Practical tips

Run the calculator with a low and high cost-of-equity assumption if you want to see how sensitive WACC is to investor-return expectations.

Compare the result against return-on-capital metrics so the capital-cost estimate has some business-performance context.

Worked example

Walk through a realistic scenario

A worked example shows how the estimate behaves when the inputs resemble a real planning decision.

Estimate WACC from debt and equity weights

A company has $40 million of debt, $60 million of equity, a 6% cost of debt, a 10% cost of equity, and a 25% tax rate.

1. Enter the market values of debt and equity.

2. Apply the tax rate to reduce the cost of debt to an after-tax figure.

3. Weight the after-tax debt cost and cost of equity by their capital shares, then add them together.

Takeaway: The result gives a quick blended financing-cost estimate that can be used as a starting point in broader valuation work.

FAQ

Common questions

How is WACC calculated here?

The calculator weights debt and equity by their share of total capital, applies the after-tax cost of debt, and adds the weighted cost of equity.

Why is cost of debt adjusted for tax?

Because interest expense is often tax-deductible, so the effective after-tax debt cost can be lower than the stated pre-tax borrowing cost.

Does this give the one correct discount rate?

No. It is only an estimate based on the assumptions entered, and many valuation models still require judgment beyond the basic WACC math.

Related tools

Keep comparing

DCF, NPV, and return-on-capital tools help show whether the weighted capital-cost estimate still fits the expected cash-flow and return profile.

Cash-flow and leverage tools can add context if you want to pressure-test whether the capital structure behind the WACC looks sustainable.

Money ToolsUpdated April 16, 2026