Determinants of the Weighted Average Cost of Capital (WACC)

The (after-tax) weighted average cost of capital (WACC) of a company is the most important measure of cost of capital used in practice. In this Demonstration, you can enter all determinants of the WACC and the WACC is calculated. Additionally, you can investigate the dependency of the WACC on the respective input parameters.

The cost of debt and cost of equity are calculated with with the respective betas.

The levered equity beta is calculated from the unlevered beta via .

The WACC (after tax) is computed with the fully simplified expression from all input parameters . This is straightforwardly derived from the WACC and expressions given above.