I am calculating the weighted Average capital cost of a company using the following formula : WACC

However the company I am tying to find WACC has negative net income. As a result my WACC is negative. How should I handle such a scenario?

Financial Details

  • 1
    $\begingroup$ You don't need income for WACC, also, you can't have a negative marginal tax rate. $\endgroup$
    – amdopt
    Dec 24, 2020 at 13:30
  • $\begingroup$ How to measure the marginal tax rate then. Is it not tax paid / net income ? $\endgroup$
    – Echo
    Dec 24, 2020 at 14:34
  • 1
    $\begingroup$ I think that return on debt cannot become negative - else the entity is bankrupt, no? $\endgroup$ Dec 25, 2020 at 7:13


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