Calculating WACC using formulas in Excel is extraordinary. It doesn’t matter how many WACC exercises you can get, today at MiraComoSeHace we explain it better.
Here we are going to explain how to calculate the cost of debt in Excel quickly, as well as how to calculate the discount rate of a project, for this follow the seven steps.
In an Excel spreadsheet, leave cell 1A empty and in that row write from 1B: ‘Value’, ‘share, ‘cost’ and ‘weighted average’. Then in column A, starting from row 2, he writes ‘debt’, then ‘own resources’, ‘total’ and leaves one box empty.
For the other box, write ‘TIO’, then ‘interest rate’, ‘taxes’ and then in A9 the ‘cost of debt’. Fill in the corresponding data.
In box C3, we put =B3/B4, and in box C2 enter =B2/B4 always remembering that these results so far are percentages. Then, for the cost of debt, put in B9, =B7*(1-B8)
What is the WACC for?
All these types of tutorials should more than ever make you investigate the steps and procedures to keep accounting books.
It is also important to know that WACC means, for its acronym in English: Weighted Average Cost of Capital, while in Spanish the translation has been: El Coste Average Ponderado del Capital.
And although it is not a direct way to save money, remember very well to investigate other options to do so, such as getting coupons and similar offers.
Continuing with the explanation started before, then in D2 you must enter =B9 and D3 that is equal to B6. Then for the weighted average you must place =C2*D2 and drag said result to the lower box, to finally assign us a total.
These types of functions integrated in Excel have helped many people, whether they are common individuals, even people with large companies, administrators and accountants in general. That is why now more than ever lies the importance of learning to use these programs.
What is Microsoft Excel and what is it used for?
Microsoft Excel is a program available for Windows, Mac OS, Android and iOS, it has spreadsheets to carry out any operation you need. Published in 1985, it is specially directed to keep the accounting of your business.
However, Excel is not just that, over the years it has been adding many functions to solve many problems that may arise in our day to day.
Among its many possibilities, it allows the calculation of the weighted average cost of capital, or WACC for its acronym in English. An action that would normally take several minutes physically, but if you have the data sorted, a few seconds in Excel will suffice.
Microsoft Excel has the possibility of working with a programming language for the design of macros, these macros are extra functions that can be designed by users depending on the corresponding needs.
This language is Visual Basic, which can also be useful for other programs within the same “Microsoft” family.
Why use Microsoft Excel to calculate the WACC discount?
With excel, activities as basic as creating forms to enter data can be carried out, in the same way, the automation offered by the program is worthy of becoming one of the best in the area.
The use of Microsoft Excel, thanks to the digital environment in which it works, the versatility it offers is unmatched, so if at any time we need to make a change in a formula or value, it in turn changes the entire accounting quickly.
In the same way, its compatibility with different operating systems allows us to synchronize our work when we require it, we can even download the accounting books and analyze them on our mobile without having an internet connection.
On the other hand, although with fewer users, are Google spreadsheets. This “application” allows users to do a lot of activities.
For example, to function as a wacc calculator, as long as you follow the different finance wacc formulas to the letter.
