Weighted Average Cost Of Capital

Oracle Corporation (ORCL)


+2.37 (+2.21%)
Share price $ 109.85
Beta 0.996
Diluted Shares Outstanding 2,786
Cost of Debt
Tax Rate 12.18
After-tax Cost of Debt 3.19%
Risk-Free Rate
Market Risk Premium
Cost of Equity 8.445
Total Debt 75,859
Total Equity 306,042.10
Total Capital 381,901.10
Debt Weighting 19.86
Equity Weighting 80.14

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.