Weighted Average Cost Of Capital

Warner Bros. Discovery, Inc. (WBD)


-0.48 (-3.34%)
Share price $ 14.045
Beta 1.503
Diluted Shares Outstanding 1,940
Cost of Debt
Tax Rate 17.73
After-tax Cost of Debt 2.99%
Risk-Free Rate
Market Risk Premium
Cost of Equity 10.402
Total Debt 48,999
Total Equity 27,247.30
Total Capital 76,246.30
Debt Weighting 64.26
Equity Weighting 35.74

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.