What is the WACC with 80% equity at 10% and 20% debt at 6%, taxed at 25%?
8.9%
With 80% equity costing 10% and 20% debt costing 6% before a 25% tax shield, the weighted average cost of capital is 8.9%.
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% × 6% × (1 − 25%)) = 8.9%
The tax shield takes debt's effective cost from 6% to 4.5%.
Open the full WACC calculator to use your own figures.
Similar questions
- 80/20 · 10% / 6% · 21% tax = 8.95%
- 80/20 · 10% / 5% · 21% tax = 8.79%
- 80/20 · 10% / 5% · 25% tax = 8.75%
- 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 6%, taxed at 25%?
- With 80% equity costing 10% and 20% debt costing 6% before a 25% tax shield, the weighted average cost of capital is 8.9%. (80% × 10%) + (20% × 6% × (1 − 25%)) = 8.9%.
- 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.