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Microsoft Corp (MSFT) — WACC Analysis

WACC Breakdown

Microsoft Corp (MSFT) has a weighted average cost of capital (WACC) of 9.3%. The cost of equity is 9.3%, derived from a beta of 1.13 and a risk-free rate of 4.7%. The after-tax cost of debt is 6.0%. The capital structure is 98.9% equity and 1.1% debt.

Interpretation

A WACC of 9.3% is moderate, reflecting the market's balanced risk assessment of Microsoft Corp.

Investors can compare MSFT's WACC of 9.3% against industry peers to gauge its relative financing costs. A beta of 1.13 reflects the stock's volatility relative to the broader market.

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VALUATION

MSFT WACC: 9.30% for Microsoft Corp

Current inputs imply a 9.34% cost of equity and a 7.57% pre-tax cost of debt. Use this discount rate as a starting point for DCF validation.

[01]Current Market Data
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WACC Calculation Process
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Market Data Loaded
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Company Data Fetched
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Beta Calculated (5Y)
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Inputs Auto-Populated
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WACC Calculated
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Step 2: Enter Ticker Symbol
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Step 4: Review Auto-Populated WACC Inputs

Values are automatically populated from real data. You can adjust them manually if needed.

4.30%
1.000
4.23%
5.00%
21.00%
70.00%
Debt: 30.00%Equity: 70.00%

Please enter a valid company ticker to calculate WACC

Microsoft Corp Common Stock (MSFT) WACC Results
Weighted Average Cost of Capital
9.30%
Cost of Equity
9.34%
Risk-Free Rate4.74%
Beta1.13
Market Risk Premium4.23%
Cost of Debt
5.98%
Pre-Tax Cost of Debt7.57%
Tax Rate21.00%
Tax Shield1.59%
Capital Structure
Equity: 98.89%($3588.32B)
Debt: 1.11%($40.29B)
Equity Component
9.23%
98.89% × 9.34%
Debt Component
0.07%
1.11% × 5.98%

Microsoft Corp (MSFT) WACC in context

Microsoft Corp (MSFT) currently screens with an estimated WACC of 9.30%. That blends a 9.34% cost of equity, a 7.57% pre-tax cost of debt, and a 98.89% equity weight into the discount rate you would typically use in a DCF model.

falls into a common range for established public companies and is a practical DCF starting point.

What MSFT WACC implies

A 9.30% discount rate falls into a common range for established public companies and is a practical DCF starting point.

How this page calculates MSFT

This page combines CAPM-based cost of equity with SEC-derived debt and capital structure inputs. The current beta is 1.13 and equity accounts for 98.89% of capital.

What to do next

Validate business quality on the company page, then carry the same discount-rate assumptions into the DCF page to test fair value sensitivity.

Disclaimer: This is not financial advice. Data sourced from SEC EDGAR and Polygon.io. Past performance does not guarantee future results. Always conduct your own research before making investment decisions.