Weighted Average Cost Of Capital

BorgWarner Inc. (BWA)


-0.01 (-0.02%)
Share price $ 46.62
Beta 1.410
Diluted Shares Outstanding 236.80
Cost of Debt
Tax Rate 23.62
After-tax Cost of Debt 0.94%
Risk-Free Rate
Market Risk Premium
Cost of Equity 10.061
Total Debt 4,228
Total Equity 11,039.62
Total Capital 15,267.62
Debt Weighting 27.69
Equity Weighting 72.31

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.