Overview

The free excel template help the user
to calculates the weighted average cost of capital for the long-term funding used
by the firms, supplied by its creditors (or lenders) and the owners (or shareholders),

Inputs in the green cells only 

Equity financing (Column C, Row 8): The
long-term funding supplied by the shareholders includes both common stock and
preferred stock, common stock includes outstanding common stock and retained
earnings

 Debt financing (Column C, Row 9): The long-term
funding supplied by the creditors is long term debt only. Accounts payable,
accrued expenses, and other non-debt or current liabilities are excluded, short
term seasonal debt is also excluded, if the short-term debt is continuing as a
revolving, so that debt can be included as part of long-term debt

 Risk free rate (Column F, Row 8): is
return of an investment with zero risk, approximated by the return on very
short government treasury bond

Market risk premium (Column F, Row 9): is
difference between expected return on a market portfolio and risk-free rate

Levered beta (Column F, Row 10): is a
measure of market risk

Debt interest (Column I, Row 8): it is annual
interest on long term debt

Corporate tax (Column I, Row 9): tax on
net profit

 Outputs

 After you fill the green cells, the
data will dynamically flow into the following below

 Capital structure weights

Cost of equity using CAPM formula

Cost of debt after tax

Weighted average cost of capital

First dashboard showing the impact of
changing capital structure on WACC

Second dashboard showing the impact of
changing levered beta on WACC

 If you have inquiries please contact us

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