WACC Calculator: Cost of Capital [Free 2026]

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WACC Calculator

Weighted Average Cost of Capital

Equity Value (Rs)

Cost of Equity (%)

Debt Value (Rs)

Cost of Debt (%)

Tax Rate (%)

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WACC

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Equity Weight

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Debt Weight

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After-Tax Debt Cost

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How to Use the WACC Calculator

Enter Cost of Equity (%): the expected return required by equity investors. For startups, this is typically 20-40%. For public companies, use CAPM (Risk-Free Rate + Beta x Market Risk Premium).
Enter Cost of Debt (%): the interest rate on your borrowings. For Indian companies, this ranges from 8-18% depending on credit profile.
Enter Equity Weight (%) and Debt Weight (%): your capital structure. These must add up to 100%.
Enter Tax Rate (%): your effective corporate tax rate (25.17% for most Indian companies under new tax regime).

Tip: WACC is the discount rate used in DCF valuations. A lower WACC means future cash flows are worth more today. Every 1% change in WACC can swing a DCF valuation by 15-25%.

WACC Formula

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

Where: E = Equity value, D = Debt value, V = E + D, Re = Cost of equity, Rd = Cost of debt, Tc = Corporate tax rate

Example:

Equity: Rs 70 Cr (70% weight), Cost of Equity: 15%
Debt: Rs 30 Cr (30% weight), Cost of Debt: 10%
Tax Rate: 25%
WACC = (0.70 x 15%) + (0.30 x 10% x (1 – 0.25))
WACC = 10.5% + 2.25% = 12.75%

This means the company needs to earn at least 12.75% on its investments to create value. Any project returning less than WACC destroys value.

WACC Benchmarks India (2026)

By Company Type:

Large Cap (Nifty 50): 10-13% WACC
Mid Cap: 12-16% WACC
Small Cap: 14-20% WACC
VC-backed startups: 25-45% WACC (very high cost of equity)
NBFCs: 10-14% WACC (leveraged, moderate equity cost)
Banks: 10-12% WACC
Infrastructure: 10-14% WACC (capital intensive, moderate risk)

Key Inputs for Indian Companies:

Risk-Free Rate: 7.0-7.3% (10-year Government of India bond yield)
Equity Risk Premium (India): 6-8% (Damodaran estimate for India: ~7.5%)
Country Risk Premium: 1.5-2.5% (for India over developed markets)
Corporate Tax Rate: 25.17% (new regime) or 34.94% (old regime with surcharge)

Sources: Damodaran Online (NYU Stern), RBI G-Sec yield data, SEBI market data.

Why WACC Matters for Startups

Most founders think WACC is only for public companies and CFAs. Wrong. WACC directly impacts:

Fundraising valuation: Investors use WACC (or a cost of capital proxy) to discount your projected cash flows. Higher perceived risk = higher discount rate = lower valuation for the same projections.
Capital allocation: Every rupee invested in marketing, product, or hiring should return more than WACC. If your WACC is 30% and marketing returns 15%, you are destroying value.
Debt vs equity decisions: Debt is cheaper than equity (tax shield + lower return expectations). But too much debt increases financial risk, which pushes both cost of debt and equity up. The optimal capital structure minimizes WACC.
Acquisition pricing: When evaluating acquisitions (buying a smaller company, acqui-hire), WACC is the minimum hurdle rate for the deal to create value.

Watch how to calculate your cost of capital for better decisions

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FAQs

FAQs about WACC Calculator

What is WACC?

Weighted Average Cost of Capital is the blended return rate required by all capital providers, weighted by their proportion. It is the minimum return a business must earn.

Why does debt have a tax benefit?

Interest is tax-deductible. At 10% debt cost and 25% tax rate, after-tax cost is only 7.5%. This is why moderate debt can lower WACC.

What cost of equity for startups?

CAPM doesn’t work well for startups. Use build-up: risk-free (7%) + equity risk premium (7%) + size (5-8%) + company risk (5-15%) = 24-37%.

How does capital structure affect WACC?

Adding debt lowers WACC because debt is cheaper after tax. But too much debt raises distress risk, increasing both costs. Optimal structure minimizes WACC.

Indian corporate tax rate?

New regime (115BAA): 25.17% effective. Old regime: ~34.94%. Most new companies use 25.17%.

How is WACC used in DCF?

WACC discounts Free Cash Flows to Enterprise. Sum of discounted CFs + terminal value = Enterprise Value. Lower WACC = higher valuation.

Should startups calculate WACC?

Most early-stage startups are 100% equity, making WACC = cost of equity. More relevant when debt enters (venture debt, bank loans).

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