Weighted Average Cost Of Capital

Lucara Diamond Corp. (LUC.TO)


0.00 (0.00%)
Share price $ 0.54
Beta 1.499
Diluted Shares Outstanding 428.81
Cost of Debt
Tax Rate 37.61
After-tax Cost of Debt 2.93%
Risk-Free Rate
Market Risk Premium
Cost of Equity 10.543
Total Debt 78.60
Total Equity 231.56
Total Capital 310.16
Debt Weighting 25.34
Equity Weighting 74.66

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.