WACC Calculation
| WACC Calculation | ||
| Cost of Equity | 13.00% | |
| Cost of Debt | 8.50% | |
| Capital Structure | ||
| Weight of Equity | 50.00% | |
| Weight of Debt | 50.00% | |
| Tax Rate | ||
| Tax Rate | 35.00% | |
| WACC | 9.26% | |
For this calculation, the tax rate has been assumed to be 35%
Calculating the Weighted Average Cost of Capital (WACC)
The Weighted Cost of Capital is the average rate a company is expected to pay all its security holders to finance its assets.
The WACC is calculated as follows:
WACC=(Cost ofEquity×Weight of Equity)+(Cost of Debt×Weight of Debt)(1-Tax Rate)
To calculate the WACC using the model:
- Enter the percentage Cost of Equity in cell D4
- Enter the percentage Cost of Debt in cell D5
- Enter the percentage Weight of Equity in cell D8
- Enter the percentage Weight of Debt in cell D9
- Enter the Tax Rate in cell D12
- The WACC will be displayed in cell D14
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Question 
WACC Calculation
Joshua Loser 6.3 Depreciation and Taxes Rework
| Year | Capital Costs | O&M | Overhaul |
| 0 | -80,000 | ||
| 1 | -12,000 | ||
| 2 | -12,000 | ||
| 3 | -12,000 | -25,000 | |
| 4 | -12,000 | ||
| 5 | -12,000 | ||
| 6 | -12,000 | ||
| 7 | -12,000 | ||
| 8 | -12,000 | ||
| 9 | -12,000 | ||
| 10 | 10,000 | -12,000 |
WACC Calculation
| Year | Capital Costs | Overhaul | Revenue | PW |
| 0 | -$90,000.00 | |||
| 1 | $0.00 | $30,000.00 | $27,272.73 | |
| 2 | $0.00 | $30,000.00 | $24,793.39 | |
| 3 | -$10,000.00 | $20,000.00 | $15,026.30 | |
| 4 | $0.00 | $30,000.00 | $20,490.40 | |
| 5 | $0.00 | $30,000.00 | $18,627.64 | |
| 6 | -$15,000.00 | $15,000.00 | $8,467.11 | |
| $114,677.56 | ||||
| Future Worth = Sum of revenue | $155,000.00 | |||
| Present Worth Calculation | Future Worth Calculation | |||
| PW= | $87,493.46 | FW= | $155,000.00 | |
| Future Worth | 155,000 | Present Worth | 87,493.46 | |
| Interest Rate r | 0.1 | Interest Rate r | 0.1 | |
| Years (t) | 6 | Years (t) | 6 | |
| Initial Cost | $100,000 | |||
| Annual Cash Flows | $30,000 | |||
| Year 3 Overhaul | $10,000 | |||
| Year 6 Clean-up Costs | $15,000 | |||
| Equipment Salvage Value | $10,000 | |||
| r (not provided in Module 2) | 0.1 | |||
| Net Annual Cash Flow | Annual Cost | Year 3 Overhaul | Year 6 Clean-up Cost | Salvage Value | Depreciation | Equipment Sold For | Tax Rate |
| $81,155 | $20,000 | $15,000 | 35% | ||||
| $81,155 | $20,000 | $15,000 | 35% | ||||
| $81,155 | $20,000 | -$15,390 | $15,000 | 35% | |||
| $81,155 | $20,000 | $15,000 | 35% | ||||
| $81,155 | $20,000 | $15,000 | 35% | ||||
| $81,155 | $20,000 | -$17,690 | $10,000 | $15,000 | $20,000 | 35% | |
Joshua Loser 6.3 Depreciation and Taxes Rework Spreadsheet
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