What is the WACC with 60% equity at 10% and 40% debt at 5%, taxed at 25%?

7.5%

With 60% equity costing 10% and 40% debt costing 5% before a 25% tax shield, the weighted average cost of capital is 7.5%.

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.

(60% × 10%) + (40% × 5% × (1 − 25%)) = 7.5%

The tax shield takes debt's effective cost from 5% to 3.75%.

Open the full WACC calculator to use your own figures.

Similar questions

Questions

What is the WACC with 60% equity at 10% and 40% debt at 5%, taxed at 25%?
With 60% equity costing 10% and 40% debt costing 5% before a 25% tax shield, the weighted average cost of capital is 7.5%. (60% × 10%) + (40% × 5% × (1 − 25%)) = 7.5%.
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.