Weighted Average Cost Of Capital

Bath & Body Works, Inc. (LB)


-0.15 (-0.19%)
Share price $ 79.92
Beta 1.776
Diluted Shares Outstanding 281
Cost of Debt
Tax Rate 22.71
After-tax Cost of Debt 3.58%
Risk-Free Rate
Market Risk Premium
Cost of Equity 11.988
Total Debt 9,455
Total Equity 22,457.52
Total Capital 31,912.52
Debt Weighting 29.63
Equity Weighting 70.37

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.