# WACC Calculator

> Computes the weighted average cost of capital from the market values and costs of equity, debt and optional preferred stock, applying the corporate tax shield to the cost of debt.

- Calculator id: `wacc` · Category: Investing & Real Estate (`investing`) · Tool name: `calculate_wacc`
- Canonical page: https://tttkmbb.com/investing/wacc · This document: https://tttkmbb.com/investing/wacc.md · JSON definition: https://tttkmbb.com/investing/wacc.json

## Purpose

Computes the weighted average cost of capital from the market values and costs of equity, debt and optional preferred stock, applying the corporate tax shield to the cost of debt.

**Use when:** You need a discount rate for a company's cash flows, or want to see how the debt/equity mix and tax rate change the overall cost of capital.

**Do not use when:** You only need the cost of equity itself (use capm) or the capital structure changes over the forecast period. Informational only; not financial advice.

## Input

| Parameter | Type | Unit | Required | Description |
| --- | --- | --- | --- | --- |
| `equity_value` | number |  | required | Market value of equity (share price × shares). (min 0, max 1000000000000000) |
| `debt_value` | number |  | required | Market (or book) value of interest-bearing debt. (min 0, max 1000000000000000) |
| `cost_of_equity_percent` | number | % | required | Required return on equity in percent (e.g. from CAPM). (min 0, max 100) |
| `cost_of_debt_percent` | number | % | required | Pre-tax interest rate on the debt in percent. (min 0, max 100) |
| `tax_rate_percent` | number | % | required | Marginal corporate tax rate; interest is tax-deductible so debt costs (1 − t) × rate. (min 0, max 100) |
| `preferred_value` | number |  | optional, default 0 | Market value of preferred stock, if any. (min 0, max 1000000000000000) |
| `cost_of_preferred_percent` | number | % | optional | Preferred dividend yield in percent; required when preferred_value > 0. (min 0, max 100) |

## Output

| Field | Type | Unit | Description |
| --- | --- | --- | --- |
| `wacc_percent` | number | % | E/V·ke + D/V·kd·(1 − t) + P/V·kp. |
| `weight_equity_percent` | number | % | E / (E + D + P) × 100. |
| `weight_debt_percent` | number | % | D / (E + D + P) × 100. |
| `weight_preferred_percent` | number | % | P / (E + D + P) × 100. |
| `after_tax_cost_of_debt_percent` | number | % | cost_of_debt × (1 − tax_rate). |
| `total_capital` | number |  | E + D + P. |

## Formula

`V = equity_value + debt_value + preferred_value; wacc_percent = equity_value/V × cost_of_equity_percent + debt_value/V × cost_of_debt_percent × (1 − tax_rate_percent/100) + preferred_value/V × cost_of_preferred_percent`

Standard WACC with market-value weights and the interest tax shield applied to debt only; it assumes the company can use the full deduction and keeps the same capital structure. Informational mathematics only; not financial advice.

## Data Sources

- Wikipedia – Weighted average cost of capital — https://en.wikipedia.org/wiki/Weighted_average_cost_of_capital (reference, retrieved 2026-09-24)
- Wikipedia – Capital asset pricing model — https://en.wikipedia.org/wiki/Capital_asset_pricing_model (reference, retrieved 2026-09-24)

Data freshness: `static`. Deterministic formula with fixed constants; results never go stale. Inputs supplied by the caller determine the output.

## API

- `GET https://tttkmbb.com/api/v1/calculate/wacc?equity_value=…&debt_value=…&cost_of_equity_percent=…&cost_of_debt_percent=…&tax_rate_percent=…`
- `POST https://tttkmbb.com/api/v1/calculate/wacc` with JSON body `{"inputs": {…}}`
- Response: unified envelope (`success`, `request`, `result.values`, `result.units`, `sources`, `freshness`, `timestamp`, `next_actions`, `links`); see https://tttkmbb.com/docs/response-format.md
- Schema: https://tttkmbb.com/api/v1/calculators/wacc · OpenAPI operationId `calculate_wacc` in https://tttkmbb.com/openapi.json
- Authentication: none. Rate limit: fair use, see https://tttkmbb.com/docs/rate-limits.md.

## MCP

- Server: `https://tttkmbb.com/mcp` (Streamable HTTP, JSON-RPC 2.0, no auth)
- Tool:  `run_calculator` with `{"calculator_id": "wacc", "inputs": {…}}`

## Example

- E 600, D 400, ke 10 %, kd 5 %, tax 25 %: inputs `{"equity_value":600,"debt_value":400,"cost_of_equity_percent":10,"cost_of_debt_percent":5,"tax_rate_percent":25}` → `{"wacc_percent":7.5,"weight_equity_percent":60,"weight_debt_percent":40,"after_tax_cost_of_debt_percent":3.75,"total_capital":1000}`
- E 700, D 300, P 50 at 7 %, ke 9 %, kd 6 %, tax 30 %: inputs `{"equity_value":700,"debt_value":300,"cost_of_equity_percent":9,"cost_of_debt_percent":6,"tax_rate_percent":30,"preferred_value":50,"cost_of_preferred_percent":7}` → `{"wacc_percent":7.53,"weight_equity_percent":66.67,"weight_debt_percent":28.57,"weight_preferred_percent":4.76,"after_tax_cost_of_debt_percent":4.2}`

```
GET https://tttkmbb.com/api/v1/calculate/wacc?equity_value=600&debt_value=400&cost_of_equity_percent=10&cost_of_debt_percent=5&tax_rate_percent=25
```

## Limitations

You only need the cost of equity itself (use capm) or the capital structure changes over the forecast period. Informational only; not financial advice. Standard WACC with market-value weights and the interest tax shield applied to debt only; it assumes the company can use the full deduction and keeps the same capital structure. Informational mathematics only; not financial advice. All values are computed from the formula above; no measurement or live data is involved.

## FAQ

**Market or book values for the weights?**

Market values are preferred: share price × shares for equity and the traded value of bonds for debt. Book debt is a common approximation when bonds are not traded.

**Why is debt cheaper than equity?**

Lenders are paid first and interest is tax-deductible, so debt's after-tax cost is lower; adding debt does, however, raise the risk and hence the cost of equity.

## Related

- [CAPM Calculator](https://tttkmbb.com/investing/capm.md) — Estimate the cost of equity input.
- [DCF Valuation Calculator](https://tttkmbb.com/investing/dcf-valuation.md) — Use the WACC as the discount rate.
- [NPV Calculator](https://tttkmbb.com/finance/npv.md) — Appraise a project at the cost of capital.