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WACC Calculator
Find your weighted average cost of capital — the blended, after-tax discount rate for valuation.
How WACC Works
The WACC Formula
E and D are the market values of equity and debt, V = E + D, Rₑ is the cost of equity, R_d is the pre-tax cost of debt, and T is the corporate tax rate. Each source is weighted by its share of total capital.
Why Debt Looks Cheaper
Interest is tax-deductible, so debt carries a tax shield: a 5% pre-tax cost of debt at a 25% tax rate is only 3.75% after tax. That is why adding moderate debt can lower WACC — though too much debt raises financial risk and pushes both costs back up.
Where the Inputs Come From
Cost of Equity
Usually estimated with the CAPM: risk-free rate plus beta times the equity risk premium. It is the return shareholders demand for the risk they bear.
Cost of Debt
The yield the company pays on its borrowings — often the yield-to-maturity on its bonds or the rate on recent loans. Use the market rate, not the coupon on old debt.
Want deeper insights?
This tool works out the cost of capital for one company from figures you type in. ARIA derives discount rates across your whole portfolio and feeds them straight into valuation, risk, and position sizing — the same maths run live on real holdings, not a single manual estimate.
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