How to Calculate Weighted Average Cost of Capital in Excel! (WACC in Excel)
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- Опубликовано: 3 окт 2024
- In this video, I take you step by step on how to calculate the weighted average cost of capital in excel. Being able to calculate the weighted average cost of capital in excel is a very important aspect of financial modeling and can help you better learn how to value a company. Let me know if you have questions!
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You should use the Cost of Debt after Tax to calculate the WACC. From a tax perspective, interest expense (assuming these are incurred wholly and exclusively incurred for business purposes) are tax deductible which lowers the cost of debt.
Is that ebit - tax?
Despite the language, since I'm Brazilian, it was easier to understand your class in English than in the videos I looked for in Portuguese. Congratulations on the content.
FINALLY! I've been through several WACC calc vids and it seems as if they're either overcomplicating it or their figures were inconsistent throughout. This was simple and easy to follow. Thank you!
You’re welcome!
Brilliant video!! thank you!!!
This was way easier to understand than my FIN class on how they explain it!
2 questions:
1) Shouldn't we use the Cost of Debt after Tax in the WACC formula? Why else did we calculate it for ?
2) When writing the market cap in the table, we get rid of 3 zeros, as we did for all the other number we took from yahoo finance. Therefore, the 2.513T (2,513,000,000,000) should be put as 2,513,000,000 in the table, but you only wrote 2,513,000 meaning you missed 3 zeros. Am I wrong ?
I think he made an error regarding your first question. You’re gonna calculate the cost after tax yes.
Regarding your second question he didn’t make any error since 2.5 T = 2500 B = 2500 000 M (and he is writing in millions)
BEST USEFUL VIDEO EVER
Glad you think so!
Dont we have to use the cost of debt after tax (2.98) to calculate the WACC? why did you use 3.46 ?
you may just save my life (after i went through many wacc videos)
Thanks man. take all my beers.
Glad I could help!
@@Dividendology sir, however, when doing project valuation, beta is not defined and cant be found on yahoo. how do we find beta?
thanks
WOW! You explained that Well! Thanks so much!
thank you for the simple explanation. very helpful!
In Cost of Equity - Risk Free Rate... You are looking for the Treasury Yield for 10 years, which is listed as $1.6280, however you input Risk Free Rate as 1.628%. I'm assuming this is supposed to be a rate, not a percentage..? Which rate are we supposed to incorporate? The last PRICE? or a Certain percentage? Please clarify.
The $1.628 is the coupon payment on a treasury bond that has a $100 face value, which is a 1.628% yield, that being the rate of return of this risk-free investment. The coupon payment is in dollars, the coupon rate is expressed as a percentage. Reason why both terms are used is because if the coupon was semi-annual the coupon payment would be $0.814 but the rate would still be 1.628% which is always the annual return against the face value (usually $100 or $1000).
Very important to learn! good video on explaining!
Very clear, thank you
great step by step. thanks
Glad it was helpful!
Looks like you did a video on WACC! Thanks for this! Could this be added to the discount rate on the DCF model you’ve provided?
it could!
Great tool for investment. Nice share.
Thank you!
why you calculate the Cost of debt after Tax and effective tax rate if we don't use it when calculate the WACC?
where is the excel spreadsheet?
Love the videos! I've been binge watching all weekend lol. For a market cap, if the company is in the billions instead of trillions how many digits should it be? (Ex. WMT is 403.055B)
Thanks for watching! I appreciate it. As long as you are consistent With the way you enter the data it will work!
does the market return in minute 4:35 always be 8 or 9? how do you calculate it? thank for advance
The market return is how the market as a whole or "economy" is expected to perform in a year. As we cannot measure every single stock's profitability and put it in an index, we take proxys for this measurement, such as the S&P500 for the US. The S&P500 is an indexed fund that contains the 500 biggest American companies - a pretty good proxy to estimate the "market return". The S&P500, historically, has averaged 8-9% annually and hence the answer to your question!
@@juanperinatserrano5294 wow. Sabes mucho. Hablas español?
Hey man, do you have a video on Enterprise Value and EBITDA ?
Not yet, maybe I’ll make one in the future!
how did you get the market return?
Can someone tell me please!
Why we need cost of dept after tax, if there is no value in the formula
Hello Thanks for this Video! very useful! one question the Market Cap values need to be entered in Billions?
They don’t have to be, just be consistent with how you enter it!
Could u pls tell me this method name??
arent you supposed to take the cost of debt after tax? you took the value before and didnt multiply it with (1-taxRate) while calculating the final wacc.
Is the market value for CocaCola plc also 8 or 9%. How can i find it on yahoo if not?
you cannot find it anywhere, cuz it is the expected return you want from the investment. It could be 12 or 15, anything.
back when them 10 year t bills where 1.5%. bidenomics!
hahahaha