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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:

  1. Enter the percentage Cost of Equity in cell D4
  2. Enter the percentage Cost of Debt in cell D5
  3. Enter the percentage Weight of Equity in cell D8
  4. Enter the percentage Weight of Debt in cell D9
  5. Enter the Tax Rate in cell D12
  6. The WACC will be displayed in cell D14 


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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

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
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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