Weighted Average Cost Of Capital

Washington Federal, Inc. (WAFD)


+0.69 (+2.31%)
Share price $ 30.795
Beta 0.803
Diluted Shares Outstanding 72.57
Cost of Debt
Tax Rate 21.24
After-tax Cost of Debt 3.96%
Risk-Free Rate
Market Risk Premium
Cost of Equity 7.495
Total Debt 1,720
Total Equity 2,234.67
Total Capital 3,954.67
Debt Weighting 43.49
Equity Weighting 56.51

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.