What’s the Formula for Calculating WACC in Excel?

WACC is important for both investors and companies

Reviewed by Samantha Silberstein
Fact checked by Vikki Velasquez

There is no specific formula in Excel or other spreadsheet applications that will calculate a company’s weighted average cost of capital (WACC) for you. Instead, the sheet must be populated with data from the company’s published financial statements and other sources, then manipulated with different formulas to arrive at its WACC.

Key Takeaways

• The weighted average cost of capital (WACC) is a financial metric that reveals a firm’s total cost of capital. 
• To calculate WACC in Excel, you’ll need to gather data from financial statements and public sources.
• Excel spreadsheets must be built and multiple formulas used to calculate a company’s WACC, as there is no specific formula that can be entered.

Build the Excel Sheet

First, enter the following data into cells on the spreadsheet:

• Cost of Debt: 2.50%
• Tax Rate: 21.00%
• Debt as % of Total Capital: —
• After Tax Cost of Debt: —

• Risk-Free Rate: 2.40%
• Beta: 1.16
• Equity Risk Premium (ERP): 6.00%
• Equity as % of Total Capital: —
• Cost of Equity: —

• Cash & Cash Equivalents, ST & LT & Marketable Securities: $27,854,000,000.00
• Long Term Debt: $31,265,000,000.00
• Net Debt: —
• Total Capital: —

• Net Diluted Shares Outstanding: 471,425,000.00
• Current Share Price: $74.69
• Equity Value: —

It should resemble the following image:

Enter the Formulas

Next, enter the formulas (shown to the right of the arrows) in the following image, which also include cells that show where data should come from:

Calculate WACC

Next, add the following section to the bottom of the sheet and enter:

• Debt as % of Total Capital (Debt>Weight)
• Equity as % of Total Capital (Equity>Weight)
• After Tax Cost of Debt (Debt>Cost)
• Cost of Equity (Equity>Cost)

You multiply debt cost and weight, and add it to the product of equity cost and weight, as shown in this image:

You should now have an Excel spreadsheet that has calculated this company’s WACC:

High WACC vs. Low WACC

Each WACC is high or low depending on the industry. Some sectors, like start-up technology companies, depend on raising capital via stock, while other sectors, like real estate, have collateral to solicit lower-cost debt.

High WACC calculations mean a company is being charged more for the financing it has received. This often means the company is riskier, as lenders charge higher interest or investors require higher returns for the risk they’re taking on. Low WACC calculations mean the company may be more stable, established, or safer: investors and creditors charge less for funds.

How Do You Calculate WACC In Excel?

There are several steps needed to calculate a company’s WACC in Excel. You’ll need to gather information from its financial reports, some data from public vendors, build a spreadsheet, and enter formulas.

What’s The Formula for Calculating WACC?

There are several formulas floating around the internet, but they all calculate the same elements:

WACC = ( % Proportion of Equity * Cost of Equity ) + ( % Proportion of Debt * Cost of Debt * (1 – Tax Rate ) )

How Do You Calculate Average Weighted Price In Excel?

You can enter the prices in column X, and enter each price’s weight in the next one, column Y. Use the formula =SUMPRODUCT(X1:X10, Y1:Y10)/SUM(Y1:Y10) to calculate the average weighted price.

The Bottom Line

Weighted Average Cost of Capital is a metric that shows the cost of a company’s capital. Calculating WACC in Excel takes several steps, but it isn’t too complicated other than determining some of the values to use.