i What this calculator does
Quick answer: Work out the weighted average cost of capital from the cost of equity, cost of debt and the tax shield, for use as a discount rate. With the default inputs (market value of equity 218 890, market value of debt 6 800), it returns wacc of 16.45%.
The weighted average cost of capital is the blended return a company must earn to satisfy everyone who funds it. It is the discount rate a discounted cash flow model needs, and the hurdle a project has to clear to create value.
Debt is cheaper than equity and interest is tax deductible, which is why the after-tax cost of debt appears. The South African corporate rate of 27% is applied to that shield.
This calculator is for educational purposes only. Results are estimates and may vary depending on market conditions, spreads, commissions, platform settings, and exchange rates. It should not be considered financial advice.
How to use the WACC Calculator
Everything is pre-populated. The quickest way to understand the formula is to move one input and watch.
- 1. Market Value of Equity (R million)
- 2. Market Value of Debt (R million)
- 3. Risk-Free Rate (%) Long-dated SA government bond yield
- 4. Equity Risk Premium (%)
- 5. Beta Volatility relative to the market
- 6. Cost of Debt Before Tax (%)
The result panel reports:
- WACC Use this as the discount rate
- Cost of Equity From CAPM
- After-Tax Cost of Debt After the
Alongside the headline figures, the calculator reports equity weight, debt weight, total capital, tax shield on debt. Those are the numbers that usually explain why the headline result came out where it did.
Below the figure, the calculation is shown in full, so you are not asked to take it on faith.
See also: Enterprise Value Calculator.
Common results
What the calculator returns as the market value of equity changes, with every other input at its default (market value of debt 6 800, risk-free rate 9.8, equity risk premium 6, beta 1.15, cost of debt before tax 11.5, corporate tax rate 27).
| Market Value of Equity | Wacc | Cost Of Equity | After-Tax Cost Of Debt |
|---|---|---|---|
| 75 000 R million | 16.01% | 16.70% | 8.39% |
| 150 000 R million | 16.34% | 16.70% | 8.39% |
| 250 000 R million | 16.48% | 16.70% | 8.39% |
| 500 000 R million | 16.59% | 16.70% | 8.39% |
| 1 000 000 R million | 16.64% | 16.70% | 8.39% |
| 2 000 000 R million | 16.67% | 16.70% | 8.39% |
Figures used in this calculator
The South African constants this calculator relies on, with the page that holds the current value and the date it was last verified.
- Company tax: 27%. Source: Company Tax Rates Reference (verified 29 September 2026).
- Securities Transfer Tax: 0.25% on share purchases. Source: JSE Trading Cost Schedule (verified 27 September 2026).
- JSE trading hours: 09:00 to 17:00 SAST. Source: JSE Trading Hours and Holidays (verified 27 September 2026).
How the calculation works
There are seven inputs to fill in: Market Value of Equity, Market Value of Debt, Risk-Free Rate, Equity Risk Premium, Beta, Cost of Debt Before Tax and Corporate Tax Rate. Risk-Free Rate: Long-dated SA government bond yield. Beta: Volatility relative to the market. The cost of equity is 9.80% + 1.15 x 6.00% = 16.70%. The after-tax debt is 11.50% x (1 - 27%) = 8.39%. The weights is E/V = 97.0%, D/V = 3.0%. The wacc is 97.0% x 16.70% + 3.0% x 8.39% = 16.45%. The breakdown also lists risk-free rate, beta, equity risk premium and cost of equity.
A worked example in rand
Take the defaults as a worked case: market value of equity 218 890 R million, market value of debt 6 800 R million, risk-free rate 9.8%, equity risk premium 6%, beta 1.15 and cost of debt before tax 11.5%. The result is a wacc of 16.45%, use this as the discount rate. Alongside it: cost of equity 16.70% and after-tax cost of debt 8.39%. Change one input, the market value of equity, to 437 780, and the wacc moves from 16.45% to 16.57%. Note that the cost of equity stays the same; it is set by the other inputs.
How to read the result
The verdict line under the result says: "Equity funds 97% of the capital, so the WACC sits close to the cost of equity." That sentence is recomputed on every run; it is a reading of the numbers, not a recommendation. Read any valuation figure against the sector average and the company's own five-year range; on its own it says almost nothing.
The South African angle
The WACC calculator is the same arithmetic anywhere; what differs in South Africa is the environment it runs in. JSE shares are quoted in cents, so a share showing 12,500 is R125, and the calculators here expect rand; dividing the quote by 100 before entering it is the most common slip. Resource companies dominate the JSE All Share, which gives the index a cyclical character and makes sector comparison more important than for a US index when judging a ratio. Dual-listed companies such as the large miners and Richemont trade on the JSE at a rand price that tracks the foreign listing, so their rand valuation ratios move with the exchange rate daily. For the current numbers that sit behind the WACC calculator, see the JSE indices reference.
Spotted an outdated figure? If a rate, limit or formula in this calculator no longer matches its source, email us the page and the source. A material correction is dated on the Updates Log.
Frequently asked questions
What risk-free rate applies in South Africa?
The yield on a long-dated South African government bond, typically the ten-year or the R2035, is the usual proxy. It is materially higher than developed-market equivalents, which is why South African discount rates are higher and valuations more sensitive to them.
What equity risk premium should I use?
Five to seven percent is the common range for South Africa. Some practitioners add a separate country risk premium; others treat the higher local bond yield as already carrying it. Adding both double counts.
Why is debt cheaper than equity?
Debt holders rank ahead of shareholders and usually hold security, so they accept a lower return. Interest is also deductible against tax, which reduces the effective cost further. That is the tax shield the formula applies.
Should I use book or market values for the weights?
Market values, because WACC is a forward-looking rate and the question is what capital costs today. Book values reflect historical transactions. For debt the two are often close; for equity they rarely are.
Does a higher debt weight always lower the WACC?
Only up to a point. Beyond a certain level, lenders demand more and the cost of equity rises because the equity is riskier, which pushes the WACC back up. The relationship is a curve rather than a line.
What if the company has no debt?
Then the WACC equals the cost of equity. That is a valid outcome, and the calculator handles it: set the market value of debt to zero.
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