Weighted Average Cost Of Capital

Neuronetics Inc (STIM)

$ 13.625
0.575 (+4.41%)
Share price $ 13.625
Beta 2.678
Diluted Shares Outstanding 19.02
Cost of Debt
Tax Rate 0.00
After-tax Cost of Debt 5.00%
Risk-Free Rate
Market Risk Premium
Cost of Equity 23.773
Total Debt 36.51
Total Equity 259.08
Total Capital 295.59
Debt Weighting 12.35
Equity Weighting 87.65

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.