Weighted Average Cost Of Capital

Huntington Bancshares Incorporated (HBANN)


-0.02 (-0.08%)
Share price $ 25.09
Beta 1.320
Diluted Shares Outstanding 1,090.02
Cost of Debt
Tax Rate 15.95
After-tax Cost of Debt -3.34%
Risk-Free Rate
Market Risk Premium
Cost of Equity 10.032
Total Debt 10,643
Total Equity 27,348.60
Total Capital 37,991.60
Debt Weighting 28.01
Equity Weighting 71.99

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.