WACC Calculator

This simple spreadsheet allows you to compute the cost of capital (WACC) of your company under the current as well as the target capital structure. To learn more about the estimation of the cost of capital, please refer to the dedicated Online Module. For a detailed discussion of how the "unlevering" and "relevering" of the cost of capital works, see here. To use the calculator, proceed as follows:

  1. Enter the relevant information about the current financing policy of your firm or a comparable firm in the blue fields.
     

  2. In the yellow field, choose whether the riskiness of the firm's tax savings under the current financing policy is comparable to the riskiness of the firm's assets (usually the case for firms that pursue a target debt ratio in % of firm value) or the riskiness of the firm's debt (usually the case for firms that pursue a target debt level in currency).
     

  3. In the orange field, indicate the risikness of the firm's future tax savings under the target financing policy (see 2)
     

  4. In the green fields, provide the relevant information about the firm's target financing policy.
     

  5. Finally, the tables at the bottom will show the resulting Beta and WACC estimates under the new capital structure. (For your information, we also show you the Betas and WACC estimates that result when using simplified equations that assume that debt has a beta of 0. We advise you against using these biased values in your computations!)