Weighted Average Cost Of Capital

Huntington Bancshares Incorporated (HBAN)

$15.3

+0.25 (+1.66%)
Share price $ 15.3
Beta 1.155
Diluted Shares Outstanding 1,017
Cost of Debt
Tax Rate 18.60
After-tax Cost of Debt 1.02%
Risk-Free Rate
Market Risk Premium
Cost of Equity 9.199
Total Debt 7,122
Total Equity 15,560.10
Total Capital 22,682.10
Debt Weighting 31.40
Equity Weighting 68.60
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.