Weighted Average Cost Of Capital

TerraVest Industries Inc. (TVK.TO)

$24.79

-0.41 (-1.63%)
Share price $ 24.79
Beta 0.612
Diluted Shares Outstanding 18.35
Cost of Debt
Tax Rate 20.48
After-tax Cost of Debt 1.75%
Risk-Free Rate
Market Risk Premium
Cost of Equity 6.498
Total Debt 190.61
Total Equity 454.95
Total Capital 645.56
Debt Weighting 29.53
Equity Weighting 70.47
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.