Weighted Average Cost Of Capital

Bank of America Corporation

Bank of America Corporation (BAC)

Financial Services

Share price $ 26.27
Diluted Shares Outstanding 10,236.90
Cost of Debt
Tax Rate 18.61
After-tax Cost of Debt -0.88
Risk-Free Rate
Market Risk Premium
Cost of Equity 14.30
Total Debt 191,365.00
Total Equity 268,923.36
Total Capital 460,288.36
Debt Weighting 41.58
Equity Weighting 58.42

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.