Weighted Average Cost Of Capital

Air T, Inc. (AIRT)

$24.33

+0.78 (+3.31%)
Share price $ 24.33
Beta 1.209
Diluted Shares Outstanding 2.89
Cost of Debt
Tax Rate 18.42
After-tax Cost of Debt 2.72%
Risk-Free Rate
Market Risk Premium
Cost of Equity 9.210
Total Debt 143.99
Total Equity 70.27
Total Capital 214.25
Debt Weighting 67.20
Equity Weighting 32.80
Wacc

There are a number of methods that can be used to determine discount rates. A good approach – and the one we’ll use in this tutorial – is to use the weighted average cost of capital (WACC) – a blend of the cost of equity and after-tax cost of debt. A company has two primary sources of financing – debt and equity – and, in simple terms, WACC is the average cost of raising that money. WACC is calculated by multiplying the cost of each capital source (debt and equity) by its relevant weight and then adding the products together to determine the WACC value.