Weighted Average Cost Of Capital

Alpha Pro Tech Ltd.

Alpha Pro Tech Ltd. (APT)

Basic Materials

Share price $ 3.39
Diluted Shares Outstanding 13.96
Cost of Debt
Tax Rate 17.87
After-tax Cost of Debt -0.84
Risk-Free Rate
Market Risk Premium
Cost of Equity 10.06
Total Debt -
Total Equity 47.33
Total Capital 47.33
Debt Weighting 0.00
Equity Weighting 100.00

There are a number of methods that can be used to determine discount rates. A good approach – and the one we’ll use in this tutorial – is to use the weighted average cost of capital (WACC) – a blend of the cost of equity and after-tax cost of debt. A company has two primary sources of financing – debt and equity – and, in simple terms, WACC is the average cost of raising that money. WACC is calculated by multiplying the cost of each capital source (debt and equity) by its relevant weight and then adding the products together to determine the WACC value.