Use our free WACC calculator to estimate the weighted average cost of capital for your business. This discount rate is commonly used in DCF models, business valuations, and transaction analysis. No signup required.
Weighted Average Cost of Capital
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Cost of Equity
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Cost of Debt
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After-Tax Cost of Debt
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Corporate Tax Rate
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Enterprise Value
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Total Interest-Bearing Debt
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Cash and Cash Equivalents
$0
Derived Equity Value
$0
Debt Weight
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Equity Weight
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This estimate is directional and uses simplified assumptions. For a defensible WACC and valuation support, consult Eton Venture Services.
WACC represents the average return required by a company’s investors and lenders, based on how the business is financed.
Put another way, it answers: “Given how this business is financed, what return do they expect overall?”
The standard WACC formula is:
WACC = (E ÷ (E + D)) × Cost of Equity + (D ÷ (E + D)) × Cost of Debt × (1 − Tax Rate)
Where:
This formula works by weighting the cost of equity and the cost of debt based on how much each one contributes to the company’s total capital. Because interest is tax-deductible, the cost of debt is adjusted for taxes. This way, the final number reflects the return the business must generate to satisfy both sources of capital.
Assume a company has:
Total capital is $1,200,000.
WACC = (700,000 ÷ 1,200,000 × 15%) + (500,000 ÷ 1,200,000 × 8% × (1 − 20%))
WACC ≈ 11.4%
This means the business needs to earn roughly 11.4% on its total capital to meet the expectations of both investors and lenders.
Our calculator uses the same WACC formula outlined above, but simplifies assumptions for certain inputs to make the calculation accessible and efficient. The result is a directional, high-level estimate designed for early planning and analysis.
In formal valuation, transaction, or reporting work, WACC is typically built using market benchmarks, comparable companies, and deeper company-specific analysis.
If you’re using WACC for a transaction, valuation, or decision that requires defensibility, contact Eton Venture Services for expert support.
Discount rate in DCF models
WACC is commonly used as the discount rate in discounted cash flow (DCF) models, translating future cash flows into today’s value.
For private companies, WACC helps determine fair market value by reflecting the company’s cost of capital and risk profile.
WACC is used to assess pricing, returns, and feasibility in acquisitions, recapitalizations, and other transactions.
At Eton Venture Services, we’ve been applying WACC in valuation and financial modeling contexts since 2010. Our team’s Big Four background shapes how we approach the weighted average cost of capital calculation, emphasizing analytical rigor and informed judgment.
Rather than treating WACC as just a formula to plug numbers into, we benchmark inputs against market data, pressure-test assumptions, and incorporate company-specific risk to develop a WACC that can be relied on for real-world financial decisions.
And our clients appreciate the work we do:
Eton works with many Attivo Partners clients and we are confident introducing Eton to our clients for their valuation needs. Eton is easy to work with, process oriented and reasonably priced. Eton listens to what our client needs, understands their business model, and provides a level and ease of communication that is rare among valuation firms. Eton’s old-school approach to customer service is refreshing!
The team at Eton is fantastic! Those guys cut their teeth as securities lawyers at premier firms in Silicon Valley so no matter how complex a situation we have presented to them, they are quick on the uptake, and they quickly produce great work. Plus, I can talk to the founder of the firm by simply picking up the phone. Eton truly exceeds our expectations!
As a firm, Kruze Consulting is extremely confident in introducing Eton to our clients for valuation work. Eton is super responsive, reasonably priced, and they take customer service to impressive levels. Eton is a great partner for us and the companies we work with!
Working with Eton has been a fantastic experience, and they have been a great partner of ours. The team provides us with well-priced services, delivers quickly and is very responsive to our requests and questions, whether those communications are from our board of directors, our outside counsel, or from our financial statement auditors.
There’s no single “good” WACC that applies to every business. WACC varies based on industry, risk, growth stage, and capital structure.
As a rough guide, mature, lower-risk businesses often have lower WACCs, while early-stage or higher-risk companies tend to have higher ones. What matters most is whether the WACC accurately reflects the risk and financing of your business.
The tax rate affects only the debt portion of WACC. Because interest expense is tax-deductible, the cost of debt is reduced on an after-tax basis.
A higher tax rate lowers the effective cost of debt, which can reduce WACC if debt makes up a meaningful portion of the company’s capital.
An online WACC calculator is useful for getting a quick, high-level view of your cost of capital and seeing how changes in key inputs affect the result. It provides a directional estimate that helps you understand the range your WACC may fall into.
For transactions, 409A valuations, financial reporting, or other situations where accuracy and support matter, calculating WACC typically requires deeper market data and company-specific analysis.
If you need a WACC developed for one of these purposes, you can reach out to the team at Eton Venture Services for expert support.
