AUR WACC - Weighted Average Cost of Capital
The WACC of Aurora Innovation Inc (AUR) is 7.3%.
| Range | Selected | |
| Cost of equity | 9.6% - 12.1% | 10.85% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 6.6% - 7.9% | 7.3% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.24 | 1.3 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.6% | 12.1% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 6.6% | 7.9% |
| Selected WACC | 7.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| AUR | Aurora Innovation Inc | 1.1 | 2.18 | 1.21 |
| ACVA | ACV Auctions Inc | 0.04 | 1.25 | 1.21 |
| CTAS | Cintas Corp | 0.03 | 0.8 | 0.79 |
| DRVN | Driven Brands Holdings Inc | 0.93 | 0.79 | 0.47 |
| IAA | IAA Inc | 0.23 | 1.46 | 1.25 |
| KAR | KAR Auction Services Inc | 0.08 | 0.89 | 0.83 |
| MATW | Matthews International Corp | 0.99 | 1.07 | 0.62 |
| Low | High | |
| Unlevered beta | 0.81 | 1.06 |
| Relevered beta | 1.36 | 1.45 |
| Adjusted relevered beta | 1.24 | 1.3 |
AUR'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 AUR:
cost_of_equity (10.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.24) + 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.