Curious about the cost of capital for your business? Enter the cost of equity, cost of debt, and the proportions of equity and debt, and our Cost of Capital Calculator will show you the result.
Cost of Capital Calculator
Cost of Capital Calculator
Component | Description |
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Cost of Debt | The effective rate that a company pays on its borrowed funds. |
Cost of Equity | The return that equity investors require on their investment in the firm. |
Proportion of Debt in Capital Structure | The proportion of the company’s capital structure that is financed by debt. |
Proportion of Equity in Capital Structure | The proportion of the company’s capital structure that is financed by equity. |
Weighted Average Cost of Capital (WACC) | The average rate of return a company is expected to pay its security holders to finance its assets. |
Formula | WACC = (Proportion of Debt × Cost of Debt) + (Proportion of Equity × Cost of Equity) |
Purpose | Used to calculate the overall cost of capital for a company, aiding in investment and financial decision-making. |