In case the company is financed with only shareholder equity E and debt D, the average cost of capital is computed as follows:
| {\displaystyle {\text{WACC}}={\frac {D}{D+E}}K_{d}+{\frac {E}{D+E}}K_{e}} |
where
K_d | cost of debt |
K_e | cost of equity |
The market values of debt and equity should be used when computing the weights in the WACC formula.