Weighted Average Cost Of Capital

The RMR Group Inc. (RMR)

$30.15

-1.01 (-3.24%)
Share price $ 30.15
Beta 1.462
Diluted Shares Outstanding 31.35
Cost of Debt
Tax Rate 62.51
After-tax Cost of Debt 1.63%
Risk-Free Rate
Market Risk Premium
Cost of Equity 10.514
Total Debt 30.32
Total Equity 945.14
Total Capital 975.46
Debt Weighting 3.11
Equity Weighting 96.89
Wacc

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.