Weighted Average Cost Of Capital

Northeast Bank (NBN)


+0.78 (+1.71%)
Share price $ 46.29
Beta 1.262
Diluted Shares Outstanding 7.90
Cost of Debt
Tax Rate 31.50
After-tax Cost of Debt 18.00%
Risk-Free Rate
Market Risk Premium
Cost of Equity 9.474
Total Debt 19.45
Total Equity 365.81
Total Capital 385.26
Debt Weighting 5.05
Equity Weighting 94.95

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.