Determine the market value of equity: Share price × Number of outstanding shares
Determine the market value of debt: Market price of debt × Amount of debt outstanding
Calculate the total capital: Equity + Debt
Compute the weight of equity: Equity ÷ Total capital
Compute the weight of debt: Debt ÷ Total capital
Determine the cost of equity
Determine the cost of debt
Determine the corporate tax rate
Calculate after-tax cost of debt: Cost of debt × (1 – Tax rate)
Calculate WACC: (Weight of equity × Cost of equity) + (Weight of debt × After-tax cost of debt)