Weighted Average Cost of Capital Calculator

This weighted average cost of capital calculator provides the user with an estimate of a company's WACC.  The calculator uses equity, debt, and preferred stock information to compute the market value of each component, its weight, as well as the cost of each capital component.

       
  Weighted Average Cost of Capital Calculator  
  Equity    
  Shares of Stock Outstanding  
  Market Price of Stock ($ / Share)  
  Stock Beta  
  Risk-Free Rate (%)  
  Risk Premium (%)  
       
  Debt    
  Book Value of Debt ($)  
  Interest Expense on Debt ($)  
  Average Maturity of Debt (Years)  
  Pre-tax Cost of Debt (% / Year)  
  Tax Rate (%)  
       
  Preferred Stock    
  Shares of Preferred Outstanding  
  Market Price of Preferred ($ / Share)  
  Dividend per Share ($ / Year)  
       
       
       
  Calculator Results:  
  Market Value    
  Equity ($)  
  Debt ($)  
  Preferred Stock ($)  
  Total Capitalization ($)  
       
  Weight in Cost of Capital    
  Equity  
  Debt  
  Preferred Stock  
  Capital  
       
  Cost of Component    
  Equity  
  Debt  
  Preferred Stock  
  WACC  
       

Calculator Definitions

The variables used in our online calculator are defined in detail below, including how to interpret the results.

Shares of Stock Outstanding

This is the total number of shares of common stock the company has outstanding.

Market Price of Stock ($ / Share)

This is the current market price for each share of the company's stock.  The Market Price of Stock, along with the Shares of Stock Outstanding, can be used to compute the total market value of common equity.

Stock Beta

The stock market itself has an underlying beta of 1.0.  Individual stocks are valued according to their movement from the overall market.  A stock whose price moves more than the market over time has a beta greater than 1.0.  A stock price that moves less than the market has a beta value that is less than 1.0.

Risk-Free Rate (%)

The Risk-Free Rate is the theoretical rate of return for an investment that has zero risk.  There is no true risk-free interest rate; however, U.S. Government Treasury Bills (T-Bills) are often used to model a risk-free interest rate.

Risk Premium (%)

The Risk Premium is the expected rate of return for the stock in excess of the risk-free interest rate.  The risk premium for equities is sometimes called the equity premium

Book Value of Debt ($)

This is the carrying value of debt according to the balance sheet of the company.

Interest Expense on Debt ($)

This is the interest expense paid on debt as recorded in the company's income statement.

Average Maturity of Debt (Years)

This is the average time to maturity for the debt issued by the company.

Pre-tax Cost of Debt (% / Year)

This is the effective rate of interest that a company pays on its current debt.  The value is stated on a pre-tax basis.

Tax Rate (%)

This is the company's marginal tax rate.

Shares of Preferred Outstanding

This is the total number of shares of preferred stock the company has outstanding.

Market Price of Preferred ($ / Share)

This is the current market price for each share of the company's preferred stock.  The Market Price of Preferred, along with the Shares of Preferred Outstanding, can be used to compute the total market value of preferred equity.

Market Value: Equity, Debt, Preferred Stock ($)

This is the market value of each component of capital.  The sum of each of these three components is also used to compute the Total Capitalization of the company.

Weight in Cost of Capital: Equity, Debt, Preferred Stock (%)

This is the weight of each component of capital used by the company.  The weight of each component is found by dividing the Market Value of each component by the Total Capitalization of the company.

Cost of Component (%)

This is the cost of equity, debt, and preferred stock stated in terms of an average annual interest rate.  This information, along with the Weight in Cost of Capital, can be used to calculate the company's weighted average cost of capital or WACC.


Weighted Average Cost of Capital Calculator - Copyright © 2010 - 2015 Money-Zine.com (Last Reviewed on January 31, 2015)


Disclaimer: These online calculators are made available and meant to be used as a screening tool for the investor.  The accuracy of these calculations is not guaranteed nor is its applicability to your individual circumstances. You should always obtain personal advice from qualified professionals.