AWI
Armstrong World Industries Inc
Price:  
149.93 
USD
Volume:  
389,230.00
United States | Building Products
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AWI WACC - Weighted Average Cost of Capital

The WACC of Armstrong World Industries Inc (AWI) is 8.7%.

The Cost of Equity of Armstrong World Industries Inc (AWI) is 9.20%.
The Cost of Debt of Armstrong World Industries Inc (AWI) is 4.70%.

Range Selected
Cost of equity 8.10% - 10.30% 9.20%
Tax rate 23.70% - 24.20% 23.95%
Cost of debt 4.60% - 4.80% 4.70%
WACC 7.7% - 9.8% 8.7%
WACC

AWI WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.91 0.98
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.10% 10.30%
Tax rate 23.70% 24.20%
Debt/Equity ratio 0.09 0.09
Cost of debt 4.60% 4.80%
After-tax WACC 7.7% 9.8%
Selected WACC 8.7%

AWI'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 AWI:

cost_of_equity (9.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.91) + 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.