What is the WACC with 80% equity at 10% and 20% debt at 5%, taxed at 21%?
8.79%
With 80% equity costing 10% and 20% debt costing 5% before a 21% tax shield, the weighted average cost of capital is 8.79%.
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.
(80% × 10%) + (20% × 5% × (1 − 21%)) = 8.79%
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
- 80/20 · 10% / 5% · 25% tax = 8.75%
- 80/20 · 10% / 6% · 21% tax = 8.95%
- 80/20 · 10% / 6% · 25% tax = 8.9%
- 80/20 · 10% / 8% · 21% tax = 9.26%
- 80/20 · 10% / 8% · 25% tax = 9.2%
- 80/20 · 8% / 8% · 21% tax = 7.66%
Questions
- What is the WACC with 80% equity at 10% and 20% debt at 5%, taxed at 21%?
- With 80% equity costing 10% and 20% debt costing 5% before a 21% tax shield, the weighted average cost of capital is 8.79%. (80% × 10%) + (20% × 5% × (1 − 21%)) = 8.79%.
- 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.