Weighted Average Cost Of Capital

Sun Life Financial Inc. (SLF.TO)

$61.73

-0.58 (-0.93%)
Share price $ 61.73
Beta 0.953
Diluted Shares Outstanding 585
Cost of Debt
Tax Rate 14.26
After-tax Cost of Debt 2.74%
Risk-Free Rate
Market Risk Premium
Cost of Equity 7.486
Total Debt 10,207
Total Equity 36,112.05
Total Capital 46,319.05
Debt Weighting 22.04
Equity Weighting 77.96
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.