ADM
Archer-Daniels-Midland Co
Price:  
47.85 
USD
Volume:  
2,690,985.00
United States | Food Products
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ADM WACC - Weighted Average Cost of Capital

The WACC of Archer-Daniels-Midland Co (ADM) is 6.2%.

The Cost of Equity of Archer-Daniels-Midland Co (ADM) is 6.80%.
The Cost of Debt of Archer-Daniels-Midland Co (ADM) is 5.95%.

Range Selected
Cost of equity 5.50% - 8.10% 6.80%
Tax rate 17.20% - 18.30% 17.75%
Cost of debt 5.80% - 6.10% 5.95%
WACC 5.3% - 7.1% 6.2%
WACC

ADM WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.36 0.57
Additional risk adjustments 0.0% 0.5%
Cost of equity 5.50% 8.10%
Tax rate 17.20% 18.30%
Debt/Equity ratio 0.44 0.44
Cost of debt 5.80% 6.10%
After-tax WACC 5.3% 7.1%
Selected WACC 6.2%

ADM'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 ADM:

cost_of_equity (6.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.36) + 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.