Weighted Average Cost Of Capital

ArcelorMittal S.A. (MT.AS)

25.665 €

+0.21 (+0.82%)
Share price $ 25.665
Beta 2.047
Diluted Shares Outstanding 1,108
Cost of Debt
Tax Rate 17.03
After-tax Cost of Debt 5.14%
Risk-Free Rate
Market Risk Premium
Cost of Equity 13.167
Total Debt 8,401
Total Equity 28,436.82
Total Capital 36,837.82
Debt Weighting 22.81
Equity Weighting 77.19

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.