WACC calculator
The blended return a company has to earn for its shareholders and lenders, used as a DCF discount rate.
What WACC is
A company is funded by shareholders and lenders, and each expects a return. WACC weights the two by how much of each the company uses. It is the usual discount rate in a DCF: cash flows earned at less than WACC destroy value.
The formula
WACC = E/(D+E) × cost of equity + D/(D+E) × cost of debt × (1 − tax rate), with cost of equity from CAPM: risk-free rate + beta × equity risk premium.
Choosing the inputs
Use the 10-year Treasury yield as the risk-free rate and market values, not book values, for the weights. Many investors simply use 8% to 10% for large US companies; a WACC far below that usually comes from a very low beta.
For education, not investment advice.
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