Weighted Average Cost Of Capital

Walgreens Boots Alliance, Inc. (WBA)


-0.02 (-0.05%)
Share price $ 38.22
Beta 0.591
Diluted Shares Outstanding 866.40
Cost of Debt
Tax Rate -27.42
After-tax Cost of Debt 2.71%
Risk-Free Rate
Market Risk Premium
Cost of Equity 5.778
Total Debt 33,393
Total Equity 33,113.81
Total Capital 66,506.81
Debt Weighting 50.21
Equity Weighting 49.79

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.