Weighted Average Cost Of Capital

Zion Oil & Gas Inc

Zion Oil & Gas Inc (ZN)

-0.0415 (-9.79%)

Share price $ 0.3,826
Diluted Shares Outstanding 81.89
Cost of Debt
Tax Rate 0.00
After-tax Cost of Debt 5.00%
Risk-Free Rate
Market Risk Premium
Cost of Equity 2.84
Total Debt 2.57
Total Equity 31.33
Total Capital 31.78
Debt Weighting 1.42
Equity Weighting 98.58

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.