ARMK
Aramark
Price:  
33.63 
USD
Volume:  
2,915,764.00
United States | Hotels, Restaurants & Leisure
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Aramark WACC - Weighted Average Cost of Capital

The WACC of Aramark (ARMK) is 6.5%.

The Cost of Equity of Aramark (ARMK) is 7.70%.
The Cost of Debt of Aramark (ARMK) is 5.50%.

Range Selected
Cost of equity 6.40% - 9.00% 7.70%
Tax rate 21.30% - 22.60% 21.95%
Cost of debt 4.00% - 7.00% 5.50%
WACC 5.2% - 7.7% 6.5%
WACC

Aramark WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.56 0.75
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.40% 9.00%
Tax rate 21.30% 22.60%
Debt/Equity ratio 0.59 0.59
Cost of debt 4.00% 7.00%
After-tax WACC 5.2% 7.7%
Selected WACC 6.5%

Aramark'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 Aramark:

cost_of_equity (7.70%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.56) + 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.