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**Result**

Weighted Average Cost of Capital

**0.0 %**

You have to fill all fields that you see on the left side to know Weighted Average Cost of Capital (WACC).

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The expert’s staff of calculator-online provided a remarkable online WACC calculator that uses the simple weighted average cost of capital formula to perform WACC calculation within a blink of eyes.

Well, before knowing about this weighted average cost of capital calculator, let’s start with the term “WACC.’

WACC is an acronym for a Weighted Average Cost of Capital; it is said to be as the average after-tax cost of a firm’s various capital sources, including common shares, preferred shares, and debt. More specifically, WACC is the average that a firm expects to pay to finance its assets. The purpose of calculating WACC to figure out the cost of each part of the firm’s capital structure that depends on the proportion of equity, debt, and preferred stock it has. Keep in mind, all components of the cost of capital are calculated at the current market rates.

WACC formula uses simple WACC equation for a calculation of a firm’s cost of capital in which each category is proportionally weighted. It is said to be as the average rate that a firm is expected to pay to its stakeholders that helps to finance its assets.

The mathematical WACC equation of the formula for WACC is as follows:

**WACC = (E/V × Re) + [(D/V × Rd) × (1-Tc)]**

Where:

- E = Market value of the firm’s equity
- D = Market value of the firm’s debt
- ‘V’ represents the firm value = E + D
- Re = Cost of equity
- Rd = Cost of debt
- Tc = Corporate tax rate

Yes, this simple but highly accurate tool helps to calculate WACC or the weighted average cost of capital a firm considering the simple WACC formula. The calculation by our weighted average cost of capital calculator can be done according to the input values of the cost of equity, total equity, cost of debt, total debt and corporate tax rate.

Read on to know how this weight of debt calculator works!

The calculation of the weighted cost of capital becomes easy with this smart tool, read on to know about the step-by-step guide:

- First of all, enter the market value of the firm’s debt in the field of ‘Total Debt.’
- Right after, you have to enter the cost of debt in the given field
- Then, you have to enter the market value of the firm’s equity in the field of ‘Total Equity.’
- Very next, you have to enter the cost of the equity in the given field
- Then, you have to enter the corporate tax rate in the given field
- Once done, then hit the calculate button of this quality calculator to get the value WACC

To find WACC, you can use the above simple WACC formula – let we explain with the example and how to do a weighted average cost of capital calculation.

Suppose the firm has the following information:

- Debt (D) = $6,000
- Equity (E) = $14,000
- Rd = 7%
- Re = 12.5%
- Corporate Tax Rate (Tc) = 20%

Let, put these values into the mathematical WACC equation of the weighted average cost formula:

WACC = (E / V) × Re + (D / V) × Rd × (1 − Tc)

WACC = [(14000 / 14000 + 6000) × 0.125] + [(6000 / 14000 + 6000) × 0.07 × (1 − 0.2)]

The WACC for this firm is 10.43%

However, you can put these all values in the above simple wacc calculator to get the same answer!

No doubt, knowing about the WACC or weighted average cost of capital for a firm is immensely important as it is a way to gauge the expense of funding future projects. According to optimistic studies, the lower a firm’s WACC, the cheaper it is for a firm to fund new projects.

The WACC formula assists in evaluating whether the company should finance the purchase of new assets with debt or equity by comparing the cost of both options. So, use the above weighted average cost calculator to understand how to calculate the WACC.