Calculate Weighted Average Cost of Capital (WACC) and analyze capital structure components for investment decisions.
Determine your company's cost of capital by calculating WACC, cost of equity using CAPM, cost of debt, and preferred stock costs. Essential for capital budgeting and investment analysis.
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Typical capital structure for a large, established corporation with moderate risk profile.
Equity Value: $5000000
Debt Value: $2000000
Preferred Value: $500000
Risk-Free Rate: 2.5%
Beta: 1.1
Market Risk Premium: 6%
Cost of Debt: 4.5%
Tax Rate: 25%
Cost of Preferred: 6.5%
High-growth startup with limited debt and higher equity costs due to increased risk.
Equity Value: $2000000
Debt Value: $300000
Risk-Free Rate: 2.5%
Beta: 1.8
Market Risk Premium: 7%
Cost of Debt: 8%
Tax Rate: 21%
Stable utility company with high debt levels and low risk profile.
Equity Value: $3000000
Debt Value: $4000000
Risk-Free Rate: 2.5%
Beta: 0.7
Market Risk Premium: 6%
Cost of Debt: 3.5%
Tax Rate: 25%
Technology company with high equity valuation and moderate debt levels.
Equity Value: $8000000
Debt Value: $1500000
Risk-Free Rate: 2.5%
Beta: 1.4
Market Risk Premium: 6.5%
Cost of Debt: 5.5%
Tax Rate: 21%