# How to calculate the WACC discount rate

In most investment analysis, we ask that we use the discount rate. But what is the **discount rate (WACC)** ? The **discount rate** is the minimum return required for any investment project. Therefore, we will accept an investment if its performance is above the WACC (%). In this article we will explain **how to calculate WACC.**

- Spreadsheet (Excel)

#### one

Obtain the following data regarding the investment with its values:

- D: Financial debt = 6743
- E: Capital contributed by shareholders = 65716
- Kd: Cost of financial debt = 0.04%
- T: The tax paid on profits = 24%
- Ke: Profitability demanded by the shareholders (it would be like the interest demanded by the shareholders although no interest is charged) = 3.53%

#### two

Perform the following operation:

**Kd * D (1-T) + Ke * E =** **0.0004 * 6743 (1-0.24) + 0.0353 * 65761 = 2.04 + 2321.37 = 2323.4**

#### 3

Once you have done point 2, perform the following operation:

**E + D = 65761 + 6743 = 72504**

#### 4

Once you have both results, divide them and you will obtain the **WACC** :

**WACC = (Kd * D (1-T) + Ke * E) / (E + D) = 2323.4 / 72504 = 0.032**

We multiply this value by 100 to obtain the percentage and obtain the result of 3.20%