Our Cost of Capital Calculator is an essential tool for investors, financial analysts, and business managers. It helps you quickly determine a company’s cost of capital, cost of equity, or cost of debt with just a few inputs.
Whether you’re evaluating investment opportunities, conducting financial analysis, or making strategic business decisions, this calculator provides valuable insights into a company’s financial structure.
Use it to gain a deeper understanding of capital costs and make more informed financial choices in today’s competitive business landscape.
Cost of Capital Calculator
How to Use the Cost of Capital Calculator
1. Select Calculation Type: Choose what you want to calculate from the dropdown menu: Cost of Capital, Cost of Equity, or Cost of Debt.
2. Enter Required Information: Fill in the input fields that appear based on your selection:
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- For Cost of Capital: You’ll need to input data for both Cost of Equity and Cost of Debt calculations.
- For Cost of Equity: Enter the Risk-Free Rate, Beta, and Market Return.
- For Cost of Debt: Provide the Interest Rate and Tax Rate.
3. Click Calculate: After entering all required information, click the “Calculate” button to get your result.
4. Interpret Results: The calculator will display the result as a percentage. For Cost of Capital, this represents the overall cost of financing for the company. For Cost of Equity, it shows the required return for equity investors. For Cost of Debt, it indicates the after-tax cost of borrowing.
Note: Hover over the info icons (ⓘ) next to each input field for more detailed explanations of what each term means.
Understanding the Inputs:
- Risk-Free Rate: Typically the yield on government bonds. Enter as a percentage (e.g., 2.5 for 2.5%).
- Beta: Measures a stock’s volatility compared to the overall market. A beta of 1 indicates the stock moves with the market.
- Market Return: The expected return of the overall stock market. Enter as a percentage.
- Interest Rate: The rate at which the company borrows money. Enter as a percentage.
- Tax Rate: The company’s effective tax rate. Enter as a percentage.
Remember, the accuracy of your results depends on the accuracy of your inputs. Always use the most up-to-date and reliable data available for your calculations.