Weighted Average Cost of Capital (WACC)
Formula
(E/V × Re) + (D/V × Rd × (1-T))
CategoryTime Value of Money
ComponentsE (equity); D (debt); V (total); Re (cost of equity); Rd (cost of debt); T (tax rate)
Example(0.6 × 12%) + (0.4 × 6% × 0.75) = 9.0%
External Links
- Weighted average cost of capital — Wikipedia