AVAV
AeroVironment Inc
Price:  
165.47 
USD
Volume:  
368,196.00
United States | Aerospace & Defense
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AVAV WACC - Weighted Average Cost of Capital

The WACC of AeroVironment Inc (AVAV) is 8.0%.

The Cost of Equity of AeroVironment Inc (AVAV) is 8.05%.
The Cost of Debt of AeroVironment Inc (AVAV) is 4.50%.

Range Selected
Cost of equity 6.70% - 9.40% 8.05%
Tax rate 5.90% - 9.10% 7.50%
Cost of debt 4.50% - 4.50% 4.50%
WACC 6.7% - 9.4% 8.0%
WACC

AVAV WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.61 0.81
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.70% 9.40%
Tax rate 5.90% 9.10%
Debt/Equity ratio 0 0
Cost of debt 4.50% 4.50%
After-tax WACC 6.7% 9.4%
Selected WACC 8.0%

AVAV'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 AVAV:

cost_of_equity (8.05%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.61) + 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.