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How to Calculate WACC.
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How to Calculate WACC.

Rosemary Njeri

WACC is short for weighted average cost of capital.

WACC is used in financial circles to test whether a return on investment can exceed or meet an asset, project, or company’s cost of invested capital.

Formula to calculate WACC.

How to Calculate WACC.

Example:

Suppose the cost of equity is $ 1000 while the cost of debt is $200, if the percentage cost of equity is 2% and the percentage cost of debt is 3%, calculate WACC if your tax rate is 2%.

How to Calculate WACC.

Therefore, your WACC is 2.16%.

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