What is the WACC with 80% equity at 10% and 20% debt at 5%, taxed at 25%?

8.75%

With 80% equity costing 10% and 20% debt costing 5% before a 25% tax shield, the weighted average cost of capital is 8.75%.

How it is worked out

Weight each source of capital by its share of the total, then blend the costs. Debt is multiplied by (1 − tax rate) because interest is deductible; equity is not.

(80% × 10%) + (20% × 5% × (1 − 25%)) = 8.75%

The tax shield takes debt's effective cost from 5% to 3.75%.

Open the full WACC calculator to use your own figures.

Similar questions

Questions

What is the WACC with 80% equity at 10% and 20% debt at 5%, taxed at 25%?
With 80% equity costing 10% and 20% debt costing 5% before a 25% tax shield, the weighted average cost of capital is 8.75%. (80% × 10%) + (20% × 5% × (1 − 25%)) = 8.75%.
How is this worked out?
Weight each source of capital by its share of the total, then blend the costs. Debt is multiplied by (1 − tax rate) because interest is deductible; equity is not.
Can I use my own figures?
Yes — the WACC calculator takes any values and shows the full result.