Why is debt cheaper than equity in WACC?

Interest paid on corporate debt is tax-deductible, creating a "tax shield" that reduces the net cost of borrowing.

What is CAPM in cost of equity?

Capital Asset Pricing Model calculates equity cost using risk-free treasury rates, company market volatility (Beta), and equity risk premiums.

Calculate financing cost threshold. Input debt/equity capital weights and pricing rates to formulate your WACC target.

Equity Market Value ($)

Debt Market Value ($)

Cost of Equity (%)

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