WACC Excel Calculator (Basic and Comprehensive), Beta Calculation & Target Capital Structure
Originally published: 24/05/2020 12:43
Publication number: ELQ-49264-1
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WACC Excel Calculator (Basic and Comprehensive), Beta Calculation & Target Capital Structure

This model calculates a company's weighted average cost of capital (WACC) using a series of inputs

The rate of return for a company’s capital suppliers (debt, equity, preferred shares) is referred to as the Weighted Average Cost of Capital (WACC). A company’s WACC is a weighted average of the required rates of return for each source of capital.

In this model, you will have access to both a simple and a comprehensive WACC calculator. The basic calculator uses CAPM to determine the firm’s cost of equity. The comprehensive calculator includes the following features:

Methods of calculating the cost of equity:
- Capital Asset Pricing Model (CAPM)
- Fama-French Model
- Gordon Growth Model
- Bond Yield Plus Risk Premium
- Ibbotson-Chen Model
- Grinold-Kroner Model

Cost of Debt
- Historical Effective Interest Rates with multiple averages

Also included in the worksheet is an accurate method of calculating a company’s beta using the following methods:
- Pure-Play Method (Unlevered and levered method for thinly-traded stocks)
- 5-year Historical Beta (monthly compounding, with adjusted beta option)

The worksheet also includes a tool to calculate target capital structure using comparable companies analysis, and historical figures.

Simply fill in the input cells to calculate the steps required to determine a company’s WACC.

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Further information

To calculate and understand the components of weighted average cost of capital

Microsoft Office (Excel)

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