Weighted Average Cost Of Capital

LSI Industries Inc. (LYTS)


+0.24 (+2.03%)
Share price $ 12.07
Beta 1.075
Diluted Shares Outstanding 27.99
Cost of Debt
Tax Rate 21.24
After-tax Cost of Debt 1.71%
Risk-Free Rate
Market Risk Premium
Cost of Equity 8.765
Total Debt 90.63
Total Equity 337.88
Total Capital 428.51
Debt Weighting 21.15
Equity Weighting 78.85

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.