Weighted Average Cost Of Capital

Banner Corporation (BANR)


-0.35 (-0.53%)
Share price $ 65.13
Beta 1.007
Diluted Shares Outstanding 35.53
Cost of Debt
Tax Rate 18.47
After-tax Cost of Debt 5.86%
Risk-Free Rate
Market Risk Premium
Cost of Equity 8.395
Total Debt 328.13
Total Equity 2,313.99
Total Capital 2,642.13
Debt Weighting 12.42
Equity Weighting 87.58

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.