AZPN WACC - Weighted Average Cost of Capital
The WACC of Aspen Technology Inc (AZPN) is 7.4%.
| Range | Selected | |
| Cost of equity | 8.2% - 11.7% | 9.95% |
| Tax rate | 26.9% - 35.9% | 31.4% |
| Cost of debt | 7.0% - 7.0% | 7% |
| WACC | 6.6% - 8.1% | 7.4% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.94 | 1.23 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.2% | 11.7% |
| Tax rate | 26.9% | 35.9% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 7.0% | 7.0% |
| After-tax WACC | 6.6% | 8.1% |
| Selected WACC | 7.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| AZPN | Aspen Technology Inc | 0.88 | 0.58 | 0.36 |
| ACIW | ACI Worldwide Inc | 0.19 | 0.98 | 0.87 |
| ALTR | Altair Engineering Inc | 0.02 | 0.77 | 0.76 |
| CTK | CooTek (Cayman) Inc | 2.94 | 0.48 | 0.16 |
| EVBG | Everbridge Inc | 0.25 | 1.46 | 1.25 |
| FICO | Fair Isaac Corp | 0.06 | 1.24 | 1.19 |
| GTYH | Gty Technology Holdings Inc | 0.07 | -0.41 | -0.4 |
| LPSN | LivePerson Inc | 5.67 | 1.26 | 0.26 |
| PD | PagerDuty Inc | 0.33 | 1.48 | 1.21 |
| SNCR | Synchronoss Technologies Inc | 2.25 | 1.32 | 0.53 |
| TYL | Tyler Technologies Inc | 0.02 | 0.56 | 0.55 |
| Low | High | |
| Unlevered beta | 0.53 | 0.76 |
| Relevered beta | 0.91 | 1.34 |
| Adjusted relevered beta | 0.94 | 1.23 |
AZPN'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 AZPN:
cost_of_equity (9.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.94) + 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.