WACC Calculator

Weight common equity, debt and optional preferred stock by their entered market values. See each contribution, the modeled debt tax shield and the assumptions behind the combined rate.

CurrencyUse one currency for all amounts. This changes labels only; it does not convert money or change local rules.

Market value of common equityUSDUse one currency and valuation date for all capital amounts.

Market value of debtUSDUse an appropriate debt value, not interest expense. Any book-value approximation is your assumption.

Market value of preferred stockUSDOptional separate financing component; do not also include it in common equity.

Common-equity cost method

Cost of common equity%Forward-looking required return assumption, not dividend yield.

Risk-free rate for the model%Editable example, not a current market quote. Use a basis consistent with currency and cash flows.

Equity betabetaUse an equity beta consistent with the modeled leverage. Negative betas are allowed.

Equity market risk premium%Expected market return minus the risk-free rate, not the total market return.

Pre-tax borrowing cost%Forward-looking borrowing cost assumption, not necessarily an old loan’s coupon.

Assumed usable interest tax shield%Applied as kd × (1 − input/100). Set 0 when no tax benefit is assumed; this does not determine deductibility.

Cost of preferred stock%Only used when preferred stock value is positive. No debt-style tax shield is applied.

Calculation results

Weighted average cost of capital

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How to use this calculator

Enter financing values consistently

Use common equity, debt and any preferred stock on a consistent market-value basis. A component entered as zero has no weight and does not require a cost input.

Estimate equity cost

Enter it directly or use the basic CAPM option. CAPM takes a risk premium above the risk-free rate; entering total market return in that field would double-count the risk-free portion.

Make the debt adjustment explicit

Enter the pre-tax borrowing cost and the assumed usable tax-shield fraction. The default shield is a worked-example assumption, not a country’s current statutory rate.

Check component contributions

Each contribution is a rate multiplied by a financing weight. Review the combined WACC and the no-shield comparison without treating either as a guaranteed investment return.

Formula and worked example

V = common equity E + debt D + preferred stock P
CAPM equity cost ke = risk-free rate + equity beta × equity risk premium
Adjusted debt cost = kd × (1 − usable tax-shield fraction)
WACC = (E/V × ke) + (D/V × adjusted debt cost) + (P/V × kp)
No-shield comparison = (E/V × ke) + (D/V × kd) + (P/V × kp)
All component costs use the same annual rate basis.

With common equity of 600,000 and debt of 400,000, the weights are 60% and 40%. A 10% equity cost and 6% pre-tax debt cost with a 25% usable shield give 4.5% adjusted debt cost. WACC is 0.60 × 10% + 0.40 × 4.5% = 7.8%. The no-shield comparison is 8.4%. CAPM inputs of 4%, beta 1.2 and a 5% premium also give 10% equity cost.

Illustrative debt weights with fixed component costs

Equity cost 10%, pre-tax debt cost 6%, shield 25%, no preferred stock. Holding costs fixed is an arithmetic sensitivity exercise, not a prediction that more debt always reduces real financing cost.
Debt / total capital	Common equity / total	WACC
0%	100%	10.00%
40%	60%	7.80%
60%	40%	6.70%

Frequently asked questions

Why use market-value weights?

They describe the financing values in the valuation model. Book amounts may differ materially. If you substitute a book-value proxy, disclose that assumption rather than presenting it as an observed market value.

Is the tax-shield input my effective accounting tax rate?

Not automatically. Here it is the usable tax-benefit fraction assumed for interest. Actual benefits can be limited, delayed or unavailable; the calculator does not determine tax treatment.

Can I include preferred stock?

Yes, as a separate value and cost. Its weighted cost is added without the debt tax-shield factor. Complex hybrids or convertibles may need a more detailed allocation first.

Does this choose an appropriate discount rate for every project?

No. Risk, currency, inflation basis and the cash flows being valued must match the discount rate. A company-wide WACC is not automatically appropriate for every project or for equity-only cash flows.

Why are some inputs hidden when a capital amount is zero?

A zero-weight component cannot affect the weighted average. Its cost is ignored, so a blank inactive cost does not prevent calculation of the remaining components.

Methodology and sources

Static, user-entered annual component costs and market values. No live market data, beta estimation, tax advice, optimal-leverage search or cash-flow valuation is performed. Negative equity cost or WACC is not automatically clamped to zero; verify any such unusual input scenario. CAPM here excludes separate country, size or other premiums.

Aswath Damodaran, NYU Stern — cost of capital — Market-value weighting, basic CAPM and the debt-cost adjustment. Numerical defaults here are our example, not current sector estimates.
Aswath Damodaran — Cost of Capital paper — Context for preferred stock as a separate financing component and consistent use of a cost-of-capital model.

Sources checked September 1, 2026. Referenced organizations do not endorse Efficienco. Percentage inputs are percentage numbers: enter 10 for 10%, not 0.10. Weights and contributions are calculated before display rounding.