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Weighted average cost of capital (WACC)Analyst

The blended return a company must earn for its investors.

What you’ll enter

  • Market value of equity (millions)
  • Market value of debt (millions)
  • Cost of equity
  • Cost of debt (pre-tax)
  • Tax rate

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The formula

WACC = E/V × Re + D/V × Rd × (1 − T)

V = E + D. Debt is cheaper after tax because interest is deductible. WACC is the usual discount rate in a DCF.