Weighted Average Cost of Capital (WACC) Excel Model Template
Originally published: 02/10/2018 10:49
Last version published: 17/05/2019 20:02
Publication number: ELQ-28327-3
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Weighted Average Cost of Capital (WACC) Excel Model Template

This Excel model template calculates the WACC for a company, with an accompanying video to illustrate.

This Weighted Average Cost of Capital (WACC) model by CFI is an excellent Excel template.

The WACC is a firm’s cost of capital. However, it is not decided by the decision makers in the business, but by the external market. Another way of looking at WACC is to see it as the minimum rate of return an enterprise should earn in order to create value for its investors. In effect, it represents the opportunity cost of the firm.

The WACC formula used by the calculator in the Excel template is:

WACC = (E/V x Re) + ((D/V x Rd) x (1 – T))

E = market value of the firm’s equity (market cap)
D = market value of the firm’s debt
V = total value of capital (equity plus debt)
E/V = percentage of capital that is equity
D/V = percentage of capital that is debt
Re = cost of equity (required rate of return)
Rd = cost of debt (yield to maturity on existing debt)
T = tax rate

The accompanying video offers a concise explanation of how to calculate a company’s WACC. It also demonstrates how to fill out the table that is included in the Excel model template. It automatically works out the WACC once the actionable cells have been filled.

See CFI’s Channel for additional templates and resources.

This Best Practice includes
1 Excel Spreadsheet, 1 YouTube Video

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