Weighted Average Cost Of Capital

Jewett-Cameron Trading Company Ltd. (JCTCF)


+0.13 (+2.48%)
Share price $ 5.58
Beta 0.284
Diluted Shares Outstanding 3.49
Cost of Debt
Tax Rate 26.37
After-tax Cost of Debt 1.72%
Risk-Free Rate
Market Risk Premium
Cost of Equity 4.981
Total Debt 7
Total Equity 19.50
Total Capital 26.50
Debt Weighting 26.42
Equity Weighting 73.58

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.