Overview

Weighted average cost of capital (WACC) is the required return a company should generate for the risk associated with investing capital in the company. Another way of looking at WACC is to see it as the minimum rate of return an enterprise should earn in order to create value for its investors. In effect, it represents the opportunity cost of the firm.

The WACC formula used by the calculator in the Excel template is: WACC = (E/V x Re) + ((D/V x Rd) x (1 – T)) Where: E = market value of the firm’s equity (market cap) D = market value of the firm’s debt V = total value of capital (equity plus debt) E/V = percentage of capital that is equity D/V = percentage of capital that is debt Re = cost of equity (required rate of return) Rd = cost of debt (yield to maturity on existing debt) T = tax rate
Share
Reviews Add a review
Avatar
Abdul-Rauf
Justin @ Getting People Right
Justin @ Getting People Right

Great, saved me a lot of time

Avatar
Alistair Williams

Nice but very basic, gets the job done

More From Corporate Finance Institute®

Browse our top rated business templates. See All
Energy Industry Comps Template Energy Industry Comps Template
625
40
This energy industry comps template provides a guideline and example of what a comparables universe would look like for a…
Financial Institution Dividend Discount Model
1,209
49
The financial institution dividend discount model uses future dividends to find the implied share price. This model is based on…
Loan Payment Calculator
870
0
The loan payment calculator allows users to determine the principal and interest payment each month until the full balance of…
DDM - Excel Dividend Discount Model Template
1,021
78
The dividend discount model template allows investors to value a company base on future dividend payments. This is based on…
Non-directional trading strategy template Non-directional Trading Strategies Template
861
0
The non-directional trading strategies template allow users to determine the profit when buying options. This template focuses on non-directional strategies…
restructuring financial model template preview 1 Restructuring Financial Model Template
1,170
0
This restructuring financial model template is used to demonstrate the financial interactions behind the restructuring process. Adjust this model to…