What is the WACC with 50% equity at 12% and 50% debt at 5%, taxed at 21%?
7.98%
With 50% equity costing 12% and 50% debt costing 5% before a 21% tax shield, the weighted average cost of capital is 7.98%.
How it is worked out
Weight each source of capital by its share of the total, then blend the costs. Debt is multiplied by (1 − tax rate) because interest is deductible; equity is not.
(50% × 12%) + (50% × 5% × (1 − 21%)) = 7.98%
The tax shield takes debt's effective cost from 5% to 3.95%.
Open the full WACC calculator to use your own figures.
Similar questions
- 50/50 · 12% / 5% · 25% tax = 7.88%
- 50/50 · 12% / 6% · 21% tax = 8.37%
- 50/50 · 12% / 6% · 25% tax = 8.25%
- 50/50 · 12% / 8% · 21% tax = 9.16%
- 50/50 · 12% / 8% · 25% tax = 9%
- 50/50 · 10% / 8% · 21% tax = 8.16%
Questions
- What is the WACC with 50% equity at 12% and 50% debt at 5%, taxed at 21%?
- With 50% equity costing 12% and 50% debt costing 5% before a 21% tax shield, the weighted average cost of capital is 7.98%. (50% × 12%) + (50% × 5% × (1 − 21%)) = 7.98%.
- How is this worked out?
- Weight each source of capital by its share of the total, then blend the costs. Debt is multiplied by (1 − tax rate) because interest is deductible; equity is not.
- Can I use my own figures?
- Yes — the WACC calculator takes any values and shows the full result.