ADI
Analog Devices Inc
Price:  
198.59 
USD
Volume:  
3,795,869.00
United States | Semiconductors & Semiconductor Equipment
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ADI WACC - Weighted Average Cost of Capital

The WACC of Analog Devices Inc (ADI) is 9.4%.

The Cost of Equity of Analog Devices Inc (ADI) is 9.80%.
The Cost of Debt of Analog Devices Inc (ADI) is 4.40%.

Range Selected
Cost of equity 8.40% - 11.20% 9.80%
Tax rate 7.70% - 9.10% 8.40%
Cost of debt 4.00% - 4.80% 4.40%
WACC 8.1% - 10.7% 9.4%
WACC

ADI WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.99 1.14
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.40% 11.20%
Tax rate 7.70% 9.10%
Debt/Equity ratio 0.08 0.08
Cost of debt 4.00% 4.80%
After-tax WACC 8.1% 10.7%
Selected WACC 9.4%

ADI'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 ADI:

cost_of_equity (9.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.99) + 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.