Weighted Average Cost Of Capital

Source Energy Services Ltd. (SHLE.TO)


+0.08 (+4.44%)
Share price $ 1.88
Beta 3.042
Diluted Shares Outstanding 13.55
Cost of Debt
Tax Rate 0.00
After-tax Cost of Debt 13.40%
Risk-Free Rate
Market Risk Premium
Cost of Equity 17.958
Total Debt 221.47
Total Equity 25.46
Total Capital 246.93
Debt Weighting 89.69
Equity Weighting 10.31

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.