WACC (Weighted Average Cost of Capital) Calculator
What is my company blended Weighted Average Cost of Capital (WACC) factoring the corporate tax shield on debt?
Financial Inputs
Total tangible net worth or market capitalization of equity.
Sum of bank term loans, working capital facilities, and debentures.
Expected rate of return required by equity shareholders or CAPM rate.
Weighted average interest rate paid on corporate borrowings.
Applicable corporate tax rate under Section 115BAA (22% + 10% surcharge + 4% cess = 25.17%).
Blended WACC
A
After-Tax Cost of Debt
7.86
Annual Interest Tax Shield Savings
10,57,140
Key Financial Takeaways
- At a 60:40 equity-to-debt ratio, your Weighted Average Cost of Capital is 12.74%. The corporate tax shield reduces your effective borrowing rate from 10.5% to 7.86%, saving ₹10,57,140 annually in taxes.
Frequently Asked Questions
Why does adding debt lower a company WACC up to an optimal point?
Debt is cheaper than equity because lenders take senior collateral security, and interest payments are tax-deductible under the Indian Income Tax Act. However, excessive debt increases financial distress risks, eventually raising both borrowing costs and equity return demands.
Calculators on this platform provide indicative mathematical estimations based on industry-standard financial appraisal models (including Tandon Committee Method II, Nayak Turnover Method, and standard compound amortisation).
They do not constitute a formal facility sanction, credit commitment, or legal advisory from SME PAISA or any partner banking/NBFC institution. Final terms, interest margins, security stipulations, and credit sanctions remain strictly subject to formal credit appraisal, audited balance sheet verification, CMA Data assessment, and risk committee approval by institutional lenders.
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