WACC, CAPM & Valuation
Discount rates, DCF value, round dilution and bond yields — with the working shown.
Cost of equity by beta
Sensitivity: enterprise value
How this was calculated
Results are estimates for general information and planning, not financial advice. Banks and institutions may calculate differently (rounding, fees, rate changes). Confirm figures with your lender or a qualified adviser before deciding.
About the WACC, CAPM & Valuation
Four corporate-finance calculations that usually live in separate spreadsheets, each with the formula and your numbers written out. CAPM & WACC gives the cost of equity (risk-free rate + beta × market risk premium) and the weighted average cost of capital after tax. DCF value discounts your free cash flows and a terminal value — Gordon growth or an exit multiple — to an enterprise value, an equity value and a value per share, with a grid showing how the answer moves with the discount rate and the terminal assumption.
Funding round works out the post-money valuation, the price per share, the investor’s stake and the dilution, including an option pool created before the round. Bond price & YTM prices a bond from its yield or finds the yield from its price, between coupon dates too, with accrued interest, current yield and duration. No market data is built in: every rate is yours to choose.
How to use it
- Choose the currency and a calculation.
- CAPM & WACC: enter the risk-free rate, beta and the expected market return (or the equity risk premium directly), then the market values of equity and debt, the cost of debt and the tax rate.
- DCF value: grow one cash flow at a rate for a number of years, or paste each year’s free cash flow; set the discount rate (often the WACC), the terminal value method, net debt and shares.
- Funding round: enter the pre-money valuation, the investment, the fully diluted shares before the round and, if there is one, the option pool the investor wants after it.
- Bond price & YTM: enter the face value, coupon, payments a year and years to maturity, then a yield to get the price or a price to get the yield.
- Copy the summary or download the table as CSV.
Examples
Cost of equity 11.2% · after-tax cost of debt 4.5% · WACC 8.52%
PV of cash flows 435.81 · terminal value 1,744.25 (PV 1,083.04) · enterprise value 1,518.86 · less net debt of 200 = equity 1,318.86, or 131.89 a share on 10 shares
71% of the value is terminal value — the sensitivity grid shows how much it depends on the 10% and 2.5%.
Post-money 10 million · investor 20% at 1.00 a share · 2 million new shares
Price 0.875 a share · effective pre-money 7 million · founders 70%, pool 10%, investor 20%
Price 925.61 · current yield 5.40% · Macaulay duration 7.89 years · modified duration 7.67
Common uses
- Set the discount rate for an NPV or a DCF valuation.
- Value a company or a project from its cash-flow forecast, and see how sensitive the value is.
- Check what a term sheet’s valuation, pool and investment mean for your stake.
- Price a bond or compare its yield with other investments.
The formulas
- CAPM: Re = Rf + β × (Rm − Rf), plus any extra premium you add (size, country, company risk).
- WACC = E/V × Re + D/V × Rd × (1 − T) + P/V × Rp, with V = E + D + P at market values.
- DCF: EV = Σ FCFₜ ÷ (1 + r)ᵗ + TV ÷ (1 + r)ᴺ. Gordon growth: TV = FCFₙ × (1 + g) ÷ (r − g), which needs r > g. Exit multiple: TV = FCFₙ × multiple. With mid-year discounting each flow is discounted t − 0.5 years, and so is a Gordon terminal value (its flows are mid-year too); an exit-multiple value, a price at year N, is not.
- Funding round: post-money = pre-money + investment; investor stake = investment ÷ post-money; price per share = pre-money ÷ pre-money fully diluted shares (including a new pool).
- Bond: dirty price = Σ C ÷ (1 + y/m)ᵗ + F ÷ (1 + y/m)ᵗⁿ, with t in coupon periods; clean price = dirty − accrued interest; Macaulay duration = Σ t × PV ÷ price; modified = Macaulay ÷ (1 + y/m).
Choosing the inputs
- Risk-free rate: usually the yield on a long government bond in the currency of the cash flows.
- Beta: from a regression of the share’s returns on the market’s, or a sector average re-levered to the company’s debt.
- Market risk premium: an estimate — historical averages and forward-looking surveys give a range, so try more than one.
- Cost of debt: what the company would pay to borrow today (its bonds’ yield to maturity is a good guide), not the coupon on old debt.
- Weights: market values. Book values can be very different for equity.
- Terminal growth: a perpetual rate, so keep it at or below the long-run growth of the economy.
The option pool shuffle
When an investor asks for an option pool of, say, 10% after the round to be created before it, the new pool shares count in the pre-money share count. The headline pre-money valuation stays the same, but the price per share falls and the whole cost of the pool falls on the existing holders. The calculator shows that as the effective pre-money valuation: the price per share × the shares the existing holders had.
Bonds between coupon dates
With a maturity such as 9.75 years on a semi-annual bond, the next coupon is half a period away and the buyer pays the seller the interest accrued since the last one. The calculator discounts every cash flow by its fractional number of periods (the usual street convention), reports the dirty price (what changes hands), the accrued interest (coupon × the part of the period gone) and the clean price that is quoted. Day-count conventions (actual/actual, 30/360) are not modelled: the fraction comes from the years you enter.
Limitations
- A valuation is only as good as its inputs: the calculator does the arithmetic, not the forecasting.
- CAPM and WACC use one discount rate for every year; changing capital structures or risk need a year-by-year model.
- The funding round covers one priced round of common-equivalent shares: convertible notes, SAFEs, liquidation preferences and anti-dilution terms are not modelled.
- Bond yields are nominal at the coupon frequency (bond-equivalent); taxes, call features and day-count conventions are not included.
Privacy
Everything is calculated in your browser. Your figures are never uploaded or stored.
Frequently asked questions
How do you calculate the cost of equity with CAPM?
Cost of equity = risk-free rate + beta × (expected market return − risk-free rate). With a 4% risk-free rate, a beta of 1.2 and a 10% market return: 4% + 1.2 × 6% = 11.2%.
How do you calculate WACC?
Weight each source of finance by its market value and use the after-tax cost of debt: WACC = E/V × cost of equity + D/V × cost of debt × (1 − tax rate). Equity of 600 at 11.2% and debt of 400 at 6% with 25% tax give 0.6 × 11.2% + 0.4 × 4.5% = 8.52%.
What is the terminal value in a DCF?
The value of all the cash flows after the forecast years, as of the last forecast year. The Gordon growth formula assumes the last cash flow grows at a steady rate forever: FCF × (1 + g) ÷ (r − g). It often makes up most of a DCF value, so test it with the sensitivity grid.
What is the difference between pre-money and post-money valuation?
Pre-money is the company’s value before the new money; post-money adds the investment. The investor’s stake is the investment divided by the post-money valuation: 2 million into 8 million pre-money buys 20%.
What is yield to maturity?
The single discount rate that makes the present value of a bond’s coupons and repayment equal to its price — the return if you hold it to maturity and every payment arrives. A bond priced below face value yields more than its coupon; one above face value yields less.
What do Macaulay and modified duration tell me?
Macaulay duration is the average time to the bond’s cash flows, weighted by their present values. Modified duration estimates the % change in price for a 1-point change in yield: at 7.67, a rise from 6% to 7% should cost about 7.7%. The exact fall for the example bond is 7.32% (925.61 to 857.88) — duration is a straight-line estimate of a curve.