Projected WACC Calculator (September 2025 Risk-Free Rate)
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WACC Calculator: Sept 2025 Projection
Calculating WACC with September 2025 Risk-Free Rate Projections
The Weighted Average Cost of Capital (WACC) is a critical metric in corporate finance, serving as the hurdle rate for investment decisions and the discount rate for valuing companies. As we look toward the latter half of 2025, financial analysts and corporate treasurers are increasingly focused on integrating forward-looking interest rate assumptions into their valuation models.
This calculator is specifically designed to estimate WACC based on projected market conditions for September 2025. It allows you to input specific forecasts for the risk-free rate, which is the foundational component of the Capital Asset Pricing Model (CAPM).
The Importance of the September 2025 Risk-Free Rate
The Risk-Free Rate ($R_f$) typically tracks the yield on long-term government bonds, such as the 10-Year U.S. Treasury note. When performing valuations for fiscal year 2025 or discounting future cash flows starting from that period, using today's spot rate may be inaccurate if the yield curve is inverted or if central bank policy is expected to shift.
By September 2025, many economists project a stabilization of interest rates. Adjusting the $R_f$ input in this calculator allows for sensitivity analysis regarding how these macroeconomic shifts will impact a company's cost of capital.
Formula Breakdown
This tool utilizes the standard WACC formula extended by the CAPM for the cost of equity:
- Cost of Equity ($K_e$): Calculated as $R_f + \beta \times (R_m – R_f)$. Where $\beta$ is the volatility relative to the market and $(R_m – R_f)$ is the Equity Risk Premium.
- After-Tax Cost of Debt ($K_d$): Calculated as $\text{Pre-Tax Rate} \times (1 – \text{Tax Rate})$. This accounts for the tax deductibility of interest expenses.
- WACC: $\left(\frac{E}{V} \times K_e\right) + \left(\frac{D}{V} \times K_d \times (1 – T)\right)$
How to Use This Calculator
- Input the Projected Risk-Free Rate: Enter the consensus forecast for the 10-Year Treasury yield for September 2025.
- Beta and ERP: Input the company's levered beta and the expected market risk premium.
- Capital Structure: Enter the market values of equity (market cap) and debt (book or market value of outstanding debt).
- Cost of Debt & Tax: Provide the company's effective interest rate on new debt and their marginal tax rate.
function calculateWACC() {
// 1. Get Input Values
var rfRateInput = document.getElementById('rfRate').value;
var betaInput = document.getElementById('beta').value;
var erpInput = document.getElementById('erp').value;
var equityValInput = document.getElementById('equityValue').value;
var debtValInput = document.getElementById('debtValue').value;
var costDebtInput = document.getElementById('costDebt').value;
var taxRateInput = document.getElementById('taxRate').value;
// 2. Validate Inputs
if (rfRateInput === "" || betaInput === "" || erpInput === "" ||
equityValInput === "" || debtValInput === "" ||
costDebtInput === "" || taxRateInput === "") {
alert("Please fill in all fields to calculate WACC.");
return;
}
var rf = parseFloat(rfRateInput);
var beta = parseFloat(betaInput);
var erp = parseFloat(erpInput);
var E = parseFloat(equityValInput);
var D = parseFloat(debtValInput);
var rd = parseFloat(costDebtInput);
var tax = parseFloat(taxRateInput);
if (isNaN(rf) || isNaN(beta) || isNaN(erp) || isNaN(E) || isNaN(D) || isNaN(rd) || isNaN(tax)) {
alert("Please enter valid numeric values.");
return;
}
if (E < 0 || D < 0) {
alert("Equity and Debt values cannot be negative.");
return;
}
// 3. Perform Calculations
// Calculate Cost of Equity (Ke) using CAPM
// Ke = Rf + Beta * ERP
// Inputs are in percentages, so keep them consistent or convert to decimals for math
var Ke_percent = rf + (beta * erp);
// Calculate After-Tax Cost of Debt
// Kd_after_tax = Rd * (1 – TaxRate)
var taxDecimal = tax / 100;
var Kd_after_tax_percent = rd * (1 – taxDecimal);
// Calculate Weights
var V = E + D; // Total Value
if (V === 0) {
alert("Total capitalization cannot be zero.");
return;
}
var We = E / V; // Weight of Equity
var Wd = D / V; // Weight of Debt
// Calculate WACC
// WACC = (We * Ke) + (Wd * Kd_after_tax)
var wacc_percent = (We * Ke_percent) + (Wd * Kd_after_tax_percent);
// 4. Update UI
// Helper to format currency/large numbers
var formatter = new Intl.NumberFormat('en-US', {
style: 'decimal',
minimumFractionDigits: 0,
maximumFractionDigits: 2
});
document.getElementById('resKe').innerText = Ke_percent.toFixed(2) + "%";
document.getElementById('resKd').innerText = Kd_after_tax_percent.toFixed(2) + "%";
document.getElementById('resWe').innerText = (We * 100).toFixed(1) + "%";
document.getElementById('resWd').innerText = (Wd * 100).toFixed(1) + "%";
document.getElementById('resV').innerText = formatter.format(V) + " M";
document.getElementById('resWacc').innerText = wacc_percent.toFixed(2) + "%";
// Show results
document.getElementById('results').style.display = 'block';
}