Calculating your WACC is straightforward once you know the WACC formula and what each input means. This guide explains the method in plain language, walks through a manual calculation, and gives worked examples you can follow — then you can do it instantly with the WACC Calculator.
What is WACC?
The WACC calculation tells you your WACC from a few simple inputs. The figure you are solving for here is the WACC, expressed in percent.
The WACC formula
The core formula is:
WACC = Market value of equity ÷ (Market value of equity + Market value of debt) × Cost of Market value of equity + Market value of debt ÷ (Market value of equity + Market value of debt) × Cost of Market value of debt × (1 - Tax rate ÷ 100)Here is what each input means:
- Market value of equity — a money amount. Example: ₹60,00,000.
- Market value of debt — a money amount. Example: ₹40,00,000.
- Cost of equity — a percentage, such as an annual rate. Example: 14%.
- Cost of debt — a percentage, such as an annual rate. Example: 9%.
- Tax rate — a percentage, such as an annual rate. Example: 3%.
How to calculate it step by step
- Write down the market value of equity (for example, ₹60,00,000).
- Write down the market value of debt (for example, ₹40,00,000).
- Write down the cost of equity (for example, 14%).
- Write down the cost of debt (for example, 9%).
- Write down the tax rate (for example, 3%).
- Apply the formula above to get your WACC.
- Double-check the result with the WACC Calculator.
Worked examples
Example 1
| Input / Output | Value |
|---|---|
| Market value of equity | ₹60,00,000 |
| Market value of debt | ₹40,00,000 |
| Cost of equity | 14% |
| Cost of debt | 9% |
| Tax rate | 3% |
| WACC | 10.920% |
With market value of equity of ₹60,00,000, market value of debt of ₹40,00,000, cost of equity of 14% and cost of debt of 9%, the WACC works out to 10.920%.
Example 2
With market value of equity of ₹1,20,00,000, market value of debt of ₹40,00,000, cost of equity of 14% and cost of debt of 9%, the WACC works out to 12.075%.
| Result | Value |
|---|---|
| WACC | 12.075% |
Example 3
With market value of equity of ₹30,00,000, market value of debt of ₹40,00,000, cost of equity of 14% and cost of debt of 9%, the WACC works out to 9.600%.
| Result | Value |
|---|---|
| WACC | 9.600% |
Tips for an accurate result
- Keep your units consistent — mixing, say, months with years or grams with kilograms is the most common source of error.
- Round only at the very end. Rounding inputs early can shift the final answer noticeably.
- Re-run the numbers whenever an input changes, rather than estimating from an old result.
Prefer not to do the maths by hand? — the WACC Calculator does it instantly, for free, with the formula and a worked example built in.
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