Source: https://guthlabs.ai/docs/instruments/wacc-calculator/mechanism/

instrument mechanism / verified-clean

# WACC Calculator mechanism

The inspectable method record for WACC Calculator, kept separate from implementation and qualification.

Status: **VERIFIED_CLEAN**Lifecycle: **verified-clean**

## Model scope

The arithmetic formula is correct under the stated assumptions, but the catalog specification needs to define V explicitly as E+D and document whether values are market or book values. The honest label is directionally appropriate; it should also state that the result is a simplified educational estimate and not individualized investment, tax, or legal advice.

- The formula is standard only when V is explicitly defined as total capital value, normally V=E+D using consistent market values. V is absent from the listed inputs, so this definition must be added.

- The formula assumes the debt-interest tax shield is fully usable and that Tc is the applicable marginal corporate tax rate; this limitation should be stated explicitly.

## Units and conventions

- Equity value and debt value must use the same currency and valuation basis, preferably current market values rather than book values.

- Cost of equity, cost of debt, and tax rate are entered as decimal fractions: 10% = 0.10, 25% = 0.25.

- The displayed WACC percentage is the decimal result multiplied by 100.

- V is assumed to equal E+D; therefore E+D must be greater than zero.

## Inspectable vector

One of 4 source-bound review vectors:

````
{
  "inputs": {
    "equity_value": 600000000,
    "debt_value": 400000000,
    "cost_of_equity": 0.1,
    "cost_of_debt": 0.06,
    "tax_rate": 0.25
  },
  "expected_outputs": {
    "WACC_percent": 7.8
  },
  "working": "V=600,000,000+400,000,000=1,000,000,000. E/V=600,000,000/1,000,000,000=0.60. D/V=400,000,000/1,000,000,000=0.40. Equity contribution=0.60×0.10=0.060. After-tax debt contribution=0.40×0.06×(1−0.25)=0.40×0.06×0.75=0.018. WACC=0.060+0.018=0.078. As a percentage, 0.078×100=7.8%."
}
````

## Failure boundary

**BREAK_CLAIMED** · SELF_FLAGGED

The denominator V=E+D can be zero, producing an undefined WACC, and the specification does not define unit handling for percentage inputs, allowing radically different results.

## Other records

[01**Overview**](<https://guthlabs.ai/docs/instruments/wacc-calculator/>)[03**Implementation**](<https://guthlabs.ai/docs/instruments/wacc-calculator/implementation/>)[04**Qualification**](<https://guthlabs.ai/docs/instruments/wacc-calculator/qualification/>)

## Sources and evidence

These pointers bind the page to evidence. They do not grant authority or collapse verification into deployment.

- `VERIFIED_LEDGER.json`

- `evidence-tranche4/tranche4-results.json`

- `BOUNDARY_HAZARD_CATALOG.json`