AFL
Aflac Inc
Price:  
101.44 
USD
Volume:  
1,606,592
United States | Insurance

Aflac WACC - Weighted Average Cost of Capital

The WACC of Aflac Inc (AFL) is 8.3%.

The Cost of Equity of Aflac Inc (AFL) is 8.8%.
The Cost of Debt of Aflac Inc (AFL) is 5%.

RangeSelected
Cost of equity7.5% - 10.1%8.8%
Tax rate13.5% - 15.0%14.25%
Cost of debt5.0% - 5.0%5%
WACC7.1% - 9.4%8.3%
WACC

Aflac WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta0.80.94
Additional risk adjustments0.0%0.5%
Cost of equity7.5%10.1%
Tax rate13.5%15.0%
Debt/Equity ratio
0.130.13
Cost of debt5.0%5.0%
After-tax WACC7.1%9.4%
Selected WACC8.3%

Aflac'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 Aflac:

cost_of_equity (8.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.8) + 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.