Weighted Average Cost Of Capital

Swiss Water Decaffeinated Coffee In... (SWP.TO)


+0.04 (+1.37%)
Share price $ 2.95
Beta 1.697
Diluted Shares Outstanding 9.16
Cost of Debt
Tax Rate 25.55
After-tax Cost of Debt 3.54%
Risk-Free Rate
Market Risk Premium
Cost of Equity 11.573
Total Debt 117.11
Total Equity 27.02
Total Capital 144.13
Debt Weighting 81.25
Equity Weighting 18.75

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.