ARRY
Array Technologies Inc
Price:  
5.02 
USD
Volume:  
5,690,960.00
United States | Electrical Equipment
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Array WACC - Weighted Average Cost of Capital

The WACC of Array Technologies Inc (ARRY) is 6.8%.

The Cost of Equity of Array Technologies Inc (ARRY) is 8.80%.
The Cost of Debt of Array Technologies Inc (ARRY) is 6.05%.

Range Selected
Cost of equity 7.40% - 10.20% 8.80%
Tax rate 20.50% - 26.50% 23.50%
Cost of debt 5.10% - 7.00% 6.05%
WACC 5.8% - 7.8% 6.8%
WACC

Array WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.77 0.95
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.40% 10.20%
Tax rate 20.50% 26.50%
Debt/Equity ratio 0.88 0.88
Cost of debt 5.10% 7.00%
After-tax WACC 5.8% 7.8%
Selected WACC 6.8%

Array'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 Array:

cost_of_equity (8.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.77) + 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.