Weighted Average Cost Of Capital

MetLife, Inc. (MET)


-1.42 (-1.85%)
Share price $ 75.49
Beta 1.069
Diluted Shares Outstanding 869.40
Cost of Debt
Tax Rate 19.35
After-tax Cost of Debt 4.26%
Risk-Free Rate
Market Risk Premium
Cost of Equity 8.635
Total Debt 17,430
Total Equity 65,631.01
Total Capital 83,061.01
Debt Weighting 20.98
Equity Weighting 79.02

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.