AL
Air Lease Corp
Price:  
58.21 
USD
Volume:  
890,735.00
United States | Trading Companies & Distributors
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AL WACC - Weighted Average Cost of Capital

The WACC of Air Lease Corp (AL) is 7.5%.

The Cost of Equity of Air Lease Corp (AL) is 16.70%.
The Cost of Debt of Air Lease Corp (AL) is 5.75%.

Range Selected
Cost of equity 11.50% - 21.90% 16.70%
Tax rate 19.60% - 19.90% 19.75%
Cost of debt 4.00% - 7.50% 5.75%
WACC 5.2% - 9.8% 7.5%
WACC

AL WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.67 3.05
Additional risk adjustments 0.0% 0.5%
Cost of equity 11.50% 21.90%
Tax rate 19.60% 19.90%
Debt/Equity ratio 3.18 3.18
Cost of debt 4.00% 7.50%
After-tax WACC 5.2% 9.8%
Selected WACC 7.5%

AL'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 AL:

cost_of_equity (16.70%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.67) + 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.