What is the WACC with 70% equity at 8% and 30% debt at 8%, taxed at 25%?
7.4%
With 70% equity costing 8% and 30% debt costing 8% before a 25% tax shield, the weighted average cost of capital is 7.4%.
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.
(70% × 8%) + (30% × 8% × (1 − 25%)) = 7.4%
The tax shield takes debt's effective cost from 8% to 6%.
Open the full WACC calculator to use your own figures.
Similar questions
- 70/30 · 8% / 8% · 21% tax = 7.5%
- 70/30 · 8% / 6% · 21% tax = 7.02%
- 70/30 · 8% / 6% · 25% tax = 6.95%
- 70/30 · 8% / 5% · 21% tax = 6.79%
- 70/30 · 8% / 5% · 25% tax = 6.73%
- 70/30 · 10% / 5% · 21% tax = 8.19%
Questions
- What is the WACC with 70% equity at 8% and 30% debt at 8%, taxed at 25%?
- With 70% equity costing 8% and 30% debt costing 8% before a 25% tax shield, the weighted average cost of capital is 7.4%. (70% × 8%) + (30% × 8% × (1 − 25%)) = 7.4%.
- 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.