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Business Debt Capacity Calculator
Before taking on debt for a project, the question that matters isn’t “can I pay it back?” but “does the project return more than it costs to finance?” This calculator answers that with EVA (Economic Value Added) and your company’s cost of capital before and after taking on the debt.
What EVA measures. A company doesn’t create value just by turning a profit — it creates value when that profit exceeds what the capital used to generate it actually costs. The formula:
NOPAT is net operating profit after tax, and WACC is the weighted average cost of capital (debt + equity). If EVA is positive, the project or company generated more than it cost to finance — if negative, it destroyed value even with positive accounting profit.
EVA = NOPAT − Invested Capital × WACCNOPAT is net operating profit after tax, and WACC is the weighted average cost of capital (debt + equity). If EVA is positive, the project or company generated more than it cost to finance — if negative, it destroyed value even with positive accounting profit.
Want to apply this to your company with your real numbers, not an example? We’ll review your capital structure and the debt decision together in a session.
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