ACGL
Arch Capital Group Ltd
Price:  
92.69 
USD
Volume:  
1,224,046.00
Bermuda | Insurance
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ACGL WACC - Weighted Average Cost of Capital

The WACC of Arch Capital Group Ltd (ACGL) is 7.4%.

The Cost of Equity of Arch Capital Group Ltd (ACGL) is 7.60%.
The Cost of Debt of Arch Capital Group Ltd (ACGL) is 5.00%.

Range Selected
Cost of equity 6.70% - 8.50% 7.60%
Tax rate 6.70% - 7.50% 7.10%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.5% - 8.2% 7.4%
WACC

ACGL WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.62 0.65
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.70% 8.50%
Tax rate 6.70% 7.50%
Debt/Equity ratio 0.08 0.08
Cost of debt 5.00% 5.00%
After-tax WACC 6.5% 8.2%
Selected WACC 7.4%

ACGL's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for ACGL:

cost_of_equity (7.60%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.62) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.