WACC
- Created by
- Renato Passos, Eng. de Software
- Reviewed by
- Renato Passos, Eng. de Software
Last updated: Apr 18, 2026
Formula
WACC
About this calculator
The WACC calculator is an essential tool for companies and investors looking to evaluate a company's cost of capital. It provides an overview of the cost of capital, taking into account both the cost of equity and the cost of debt.
The WACC formula is calculated as E/V·Re + D/V·Rd·(1−T), where E is the value of equity, V is the total value of capital, Re is the cost of equity, D is the value of debt, Rd is the cost of debt, and T is the tax rate. This formula allows companies to better understand the cost of their operations and make informed decisions about investments and financing.
The WACC calculator is useful in real-world scenarios, such as when a company is considering an expansion or acquisition. It helps determine whether the investment is viable and if the cost of capital is within acceptable parameters. Additionally, the WACC calculator can be used to compare the performance of different companies or industries.
It is crucial to exercise caution when using the WACC calculator, as the accuracy of the results depends on the quality of the input data. Furthermore, it is essential to understand the limitations of the formula and consider other factors that may affect the cost of capital, such as risk and market volatility.
Frequently asked questions
What is WACC?
WACC stands for Weighted Average Cost of Capital, which is a measure of a company's cost of capital. It takes into account both the cost of equity and the cost of debt.
How to calculate WACC?
WACC is calculated using the formula: E/V·Re + D/V·Rd·(1−T), where E is the value of equity, V is the total value of capital, Re is the cost of equity, D is the value of debt, Rd is the cost of debt, and T is the tax rate.
When to use WACC?
WACC is useful in real-world scenarios, such as when a company is considering an expansion or acquisition. It helps determine whether the investment is viable and if the cost of capital is within acceptable parameters.
What influences WACC?
WACC is influenced by several factors, including the cost of equity, the cost of debt, the tax rate, and the company's capital structure.
How to interpret the WACC result?
The WACC result should be interpreted as the company's weighted average cost of capital. A lower WACC indicates that the company has a lower cost of capital, which can be a sign that the company is well-managed and has a lower risk profile.