UK
IRE
AU
CA
US
ZA
NAHead of Content
Page written by Ian Hawkins. Last reviewed on March 11, 2026. Next review due April 1, 2027.
This calculator is intended for illustration purposes only and exact payment terms should be agreed with a lender before taking out a loan.
WACC, or Weighted Average Cost of Capital, is a financial metric used to assess a company’s cost of capital from all its sources, including equity and debt. It’s essentially the average rate of return that a company is expected to pay its security holders to finance its assets. WACC is crucial because it provides a benchmark for making investment decisions, evaluating projects, and determining the overall financial health of a business.
To calculate the weighted average cost of capital you can simply input values to the calculator or:
Use this formula: WACC=(VE×Re)+[VD×Rd×(1−Tc)]
Where –
WACC is a versatile tool used in various aspects of corporate finance, including:
Investment Appraisal: Companies use WACC to evaluate the profitability of potential investment projects. If a project’s return exceeds the WACC, it is considered a good investment.
Valuation: WACC is used in discounted cash flow (DCF) analysis to discount future cash flows to their present value. This helps in determining the fair value of a company.
Performance measurement: WACC serves as a hurdle rate for comparing the company’s performance. A return above WACC indicates value creation, while a return below WACC suggests value destruction.
Capital structure optimization: By analyzing WACC, companies can determine the optimal mix of debt and equity financing to minimize their overall cost of capital and maximize value.
Understanding and accurately calculating WACC helps businesses make informed financial decisions, align their capital structure with strategic goals, and enhance shareholder value.
Disclaimer: Swoop Finance Ltd (Swoop) helps Canadian firms access business finance, working directly with businesses and their trusted advisors. We are a credit broker and do not provide loans or other finance products ourselves. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Swoop can introduce applicants to a number of providers based on the applicants’ circumstances and creditworthiness. Swoop may receive a commission or finder’s fee for effecting such introductions. If you feel you have a complaint, please read our complaints section highlighted above and also contained within our terms and conditions.
yet? Register here!