How to calculate WACC in Excel

Q: How do I estimate the cost of equity?

With CAPM: =risk_free+beta*(market_return-risk_free).

Formula (Excel and Google Sheets)

=B2/(B2+B3)*B4+B3/(B2+B3)*B5*(1-B6)

Weight the cost of equity and the after-tax cost of debt by their shares of the total: =B2/(B2+B3)*B4+B3/(B2+B3)*B5*(1-B6).

Result on the example: 9.39% in B7
Works in: Every current version
Google Sheets: Same formula

See it work

The formula is already in B7. Change any input and the result updates, or edit the formula to experiment.

How it works

Equity is 71.6% of the $6.7 million of capital and debt 28.4%. Each share is multiplied by its cost, and debt's cost is reduced by the tax rate because interest is tax-deductible: 6.4% × (1 − 25%) = 4.8%. The weighted total, 9.39%, is the return the company's projects need to beat.

=B2/(B2+B3)*B4+B3/(B2+B3)*B5*(1-B6)

Result0.09385074627

B2$4,800,000
The value in B2.
B3$1,900,000
The value in B3.
B2+B36700000
The + operator adds.
B2/(B2+B30.7164179104
The / operator divides.
B411.2%
The value in B4.
B2/(B2+B3)*B40.08023880597
The * operator multiplies.
B2+B36700000
The + operator adds.
B3/(B2+B30.2835820896
The / operator divides.
B56.4%
The value in B5.
B3/(B2+B3)*B50.01814925373
The * operator multiplies.
B625.0%
The value in B6.
1-B60.75
The - operator subtracts.
B3/(B2+B3)*B5*(1-B60.0136119403
The * operator multiplies.
B2/(B2+B3)*B4+B3/(B2+B3)*B5*(1-B60.09385074627
The + operator adds.

In Google Sheets

The same formula works in Google Sheets: =B2/(B2+B3)*B4+B3/(B2+B3)*B5*(1-B6). We ran it in Google Sheets mode on the same data and it returns 9.39%.

Other ways to do it

Each one was run on the same example sheet.

Formula	Result	When to use it
=SUMPRODUCT(B2:B3,VSTACK(B4,B5*(1-B6)))/SUM(B2:B3)	9.39%	The same weighting written as SUMPRODUCT, which scales to more sources of capital.
=B2/(B2+B3)B4+B3/(B2+B3)B5	9.84%Different result	Without the tax shield, WACC is overstated. Before tax: 9.84%.

Common mistakes

Use market values where you can; book values can be far from what investors would pay today.
Only debt gets the (1 − tax) adjustment, since dividends aren't tax-deductible.

Try it yourself

Same data, empty answer cell. Your formula is graded instantly, then re-checked on changed data, so a typed-in number won't pass.

Calculate WACC

In B7, calculate the weighted average cost of capital from the equity and debt values, their costs and the tax rate in B2:B6.

Questions

How do I estimate the cost of equity?

With CAPM: =risk_free+beta*(market_return-risk_free).

How is WACC used?

As the discount rate in NPV for projects with the company's usual risk.

Checked by running on 2026-10-30: every formula and result on this page was calculated by the Spreadsheet Practice formula engine, in both Excel and Google Sheets modes.