Weighted average cost of capital

For equity and debt, WACC = ke × E/(D + E) + kd × (1 − T) × D/(D + E), when kd is a before-tax debt cost and the simple tax-shield assumptions apply. Use market values for current economic weights unless a different basis is requested. Preference shares require their own component where present. Do not apply the tax adjustment twice if the debt cost is already after tax. Existing WACC is an appropriate project rate only when relevant business risk, financing proportions and providers' required returns remain suitable.