If Firm A's component cost of preferred stock is 12.5% and the component cost of common stock equity from retained earnings is 13.5%, calculate Firm A's WACC How to calculate weighted average cost of capital when given the cost of capital, cost of debt, tax rate, etc. WACC factors in common stock, preferred stock & long term debt to calculate Each of these components has a cost associated with it. In economics and accounting, the cost of capital is the cost of a company's funds ( both debt and Once cost of debt and cost of equity have been determined, their blend, the a component of the return on capital to equity holders, and influence the cost of capital through that mechanism. Preference share · Ordinary share