AMP
Ameriprise Financial Inc
Price:  
504.96 
USD
Volume:  
331,576.00
United States | Capital Markets
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AMP WACC - Weighted Average Cost of Capital

The WACC of Ameriprise Financial Inc (AMP) is 7.6%.

The Cost of Equity of Ameriprise Financial Inc (AMP) is 11.00%.
The Cost of Debt of Ameriprise Financial Inc (AMP) is 4.55%.

Range Selected
Cost of equity 9.20% - 12.80% 11.00%
Tax rate 18.80% - 19.90% 19.35%
Cost of debt 4.00% - 5.10% 4.55%
WACC 6.4% - 8.8% 7.6%
WACC

AMP WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.16 1.42
Additional risk adjustments 0.0% 0.5%
Cost of equity 9.20% 12.80%
Tax rate 18.80% 19.90%
Debt/Equity ratio 0.86 0.86
Cost of debt 4.00% 5.10%
After-tax WACC 6.4% 8.8%
Selected WACC 7.6%

AMP'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 AMP:

cost_of_equity (11.00%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.16) + 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.