An illustrative, directional weighted average cost of capital for HSBC Holdings plc at 2026-07-06, calculated using the Baratelli Institute methodology. Inputs are practitioner-reasonable public-sector norms — useful for learning the method and stress-testing a live model. Not an audited financial statement.
Full WACC calculator plus 25 other Wall Street templates are in the Baratelli Financial Modeling Toolkit — $99.
| Component | Value | Source / Assumption |
|---|---|---|
| Risk-free rate (Rf) | 4.50% | 10-year US Treasury yield, illustrative July 2026 anchor |
| Equity risk premium (ERP) | 5.50% | Damodaran-style implied ERP, illustrative July 2026 anchor |
| Beta (β) | 0.95 | Practitioner-reasonable sector estimate; refine to a 5-year weekly regression in a live model |
| Cost of equity (Ke) | 9.7% | CAPM: Rf + β × ERP = 4.50% + 0.95 × 5.50% |
| Pre-tax cost of debt (Kd) | 5.00% | Illustrative investment-grade curve estimate at issuer’s indicative rating |
| Marginal tax rate (t) | 25.0% | Blended statutory rate at domicile; refine to effective rate in a live model |
| After-tax cost of debt | 3.8% | Kd × (1 − t) = 5.00% × 75.0% |
| Equity weight (E/V) | 20.0% | Practitioner-reasonable market-value approximation |
| Debt weight (D/V) | 80.0% | Practitioner-reasonable market-value approximation |
| WACC | 4.9% | (E/V × Ke) + (D/V × Kd after-tax) = 1.94% + 3.04% |
Use this illustrative WACC as a directional anchor when learning the DCF and value-based management framework against HSBC Holdings plc, or as a starting point for a peer-comparison table across the Diversified Banks sector. For equity-only valuation frameworks (dividend discount models, residual income), use the cost of equity Ke of 9.7% instead of the blended WACC.
The methodology page walks each input in more depth and explains where reasonable practitioners disagree. If your own model uses different inputs, the companion Excel workbook exposes every formula so you can substitute directly.
All companies in the reference: The full WACC Reference Library (73 companies).
The methodology: How the numbers are calculated.
The applied companion: The Baratelli CFO & Controller’s Guide covers WACC methodology within a full controllership framework.