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

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.

Feel free to reach out to me directly via PM for details. Thank you!

This Best Practice includes
1 Excel Spreadsheet

Kenton Parrott, CFA, MBA offers you this Best Practice for free!

download for free

Add to bookmarks


Further information

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

Microsoft Office (Excel)

4.8 / 5 (6 votes)

please wait...