Weighted Average Cost Of Capital

Citi Trends, Inc. (CTRN)


+0.36 (+1.57%)
Share price $ 23.31
Beta 2.287
Diluted Shares Outstanding 9.01
Cost of Debt
Tax Rate 21.46
After-tax Cost of Debt 0.11%
Risk-Free Rate
Market Risk Premium
Cost of Equity 14.274
Total Debt 216.11
Total Equity 210.09
Total Capital 426.20
Debt Weighting 50.71
Equity Weighting 49.29

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.