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how to calculate wacc cost of capital. The weighted average cost of capital WACC is a calculation of a companys cost of capital or the minimum that a company must earn to satisfy all debts and support all assets. Their current cost of debt k D Their own current capital structure DDE Their own current cost of equity capital k E The marginal tax rate they are facing They discount all future FCF with.
Step 3 Calculate Cost Of Debt Cost Of Capital Step Guide Calculator from nl.pinterest.com
Enter the Cost of Debt which is also a percentage value. They calculate their WACC using. The cost of equity is calculated using the Capital Asset Pricing Model CAPM which equates rates of return to volatility risk vs reward.
Then enter the Total Debt which is also a monetary value.
The WACC Calculator is used to calculate the weighted average cost of capital WACC. So weight average cost of capital is 8. Re Cost of equity. For companies calculating the weighted average capital cost is one step to calculate the optimal capital structure.
