ALTR
Altair Engineering Inc
Price:  
111.85 
USD
Volume:  
925,272.00
United States | Software
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Altair WACC - Weighted Average Cost of Capital

The WACC of Altair Engineering Inc (ALTR) is 7.8%.

The Cost of Equity of Altair Engineering Inc (ALTR) is 7.95%.
The Cost of Debt of Altair Engineering Inc (ALTR) is 4.65%.

Range Selected
Cost of equity 6.00% - 9.90% 7.95%
Tax rate 26.20% - 27.00% 26.60%
Cost of debt 4.00% - 5.30% 4.65%
WACC 5.9% - 9.7% 7.8%
WACC

Altair WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.46 0.89
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.00% 9.90%
Tax rate 26.20% 27.00%
Debt/Equity ratio 0.02 0.02
Cost of debt 4.00% 5.30%
After-tax WACC 5.9% 9.7%
Selected WACC 7.8%

Altair'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 Altair:

cost_of_equity (7.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.46) + 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.