Free calculator · Corporate Finance
Cost of Equity (CAPM) & WACC
Calculates a CAPM cost of equity, with an optional size premium, and blends it with the after-tax cost of debt into a weighted average cost of capital. Inputs are the risk-free rate, beta, equity risk premium, size premium, capital-structure weights, pre-tax cost of debt, and tax rate.
Interactive Tool
Cost of Equity (CAPM) & WACC
Cost of equity
10.0%
CAPM
WACC
8.9%
the discount rate
CoE = 4.0% + 1.20 × 5.0% = 10.0%
WACC = 70.0% × 10.0% + 30.0% × 6.3% = 8.9%
After-tax cost of debt
6.3%
rate × (1 − tax)
Equity weight
70.0%
E / V
Debt weight
30.0%
D / V
CAPM builds the cost of equity from the risk-free rate + beta × ERP; WACC blends it with the tax-shielded cost of debt. The output is the whole valuation's lever, a 2% shift in WACC can move value 30–50%.
Learn the concept
This calculator comes from the free Entrepreneurial Finance course, where the concept is taught with readings, worked examples, and practice questions.
Built by Devon Coombs, CPA, MBA, Teaching Professor of Finance at Santa Clara University.