BAX
Baxter International Inc
Price:  
30.72 
USD
Volume:  
3,696,873.00
United States | Health Care Equipment & Supplies
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Baxter WACC - Weighted Average Cost of Capital

The WACC of Baxter International Inc (BAX) is 6.5%.

The Cost of Equity of Baxter International Inc (BAX) is 8.65%.
The Cost of Debt of Baxter International Inc (BAX) is 4.55%.

Range Selected
Cost of equity 6.70% - 10.60% 8.65%
Tax rate 12.60% - 13.30% 12.95%
Cost of debt 4.00% - 5.10% 4.55%
WACC 5.3% - 7.8% 6.5%
WACC

Baxter WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.62 1.03
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.70% 10.60%
Tax rate 12.60% 13.30%
Debt/Equity ratio 0.83 0.83
Cost of debt 4.00% 5.10%
After-tax WACC 5.3% 7.8%
Selected WACC 6.5%

Baxter'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 Baxter:

cost_of_equity (8.65%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.62) + 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.