Weighted Average Cost Of Capital

Templeton Emerging Markets Fund (EMF)

$12.2501

-0.15 (-1.21%)
Share price $ 12.2,501
Beta 0.868
Diluted Shares Outstanding 16.26
Cost of Debt
Tax Rate 0.00
After-tax Cost of Debt 1.14%
Risk-Free Rate
Market Risk Premium
Cost of Equity 7.077
Total Debt 15
Total Equity 199.15
Total Capital 214.15
Debt Weighting 7.00
Equity Weighting 93.00
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.