Calculating the weighted average cost of capital is relatively simple. It comprises of two components viz. cost of equity and cost of debt. Based on the capital structure of the company, the weighted average cost of capital is derived at.
WACC = [(Cost of equity * proportion of equity capital) + (cost of debt * proportion of debt capital)] / (Total equity + Debt)
In case, the company has also issued preference shares, the cost of preference capital shall also be considered while calculating WACC..