Weighted Average Cost Of Capital

Maxeon Solar Technologies, Ltd. (MAXN)


-0.52 (-2.53%)
Share price $ 20
Beta 0.907
Diluted Shares Outstanding 37.46
Cost of Debt
Tax Rate -6.47
After-tax Cost of Debt 14.87%
Risk-Free Rate
Market Risk Premium
Cost of Equity 7.848
Total Debt 187.27
Total Equity 749.14
Total Capital 936.41
Debt Weighting 20.00
Equity Weighting 80.00

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.