Weighted Average Cost Of Capital

Bristol-Myers Squibb Company (BMY)


+0.72 (+1.07%)
Share price $ 68.405
Beta 0.448
Diluted Shares Outstanding 2,245
Cost of Debt
Tax Rate 17.97
After-tax Cost of Debt 2.57%
Risk-Free Rate
Market Risk Premium
Cost of Equity 5.636
Total Debt 39,320
Total Equity 153,569.23
Total Capital 192,889.23
Debt Weighting 20.38
Equity Weighting 79.62

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.