BEN WACC - Weighted Average Cost of Capital
The WACC of Franklin Resources Inc (BEN) is 8.5%.
| Range | Selected | |
| Cost of equity | 8.6% - 12.5% | 10.55% |
| Tax rate | 22.4% - 22.8% | 22.6% |
| Cost of debt | 5.1% - 12.4% | 8.75% |
| WACC | 6.1% - 10.9% | 8.5% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.03 | 1.37 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.6% | 12.5% |
| Tax rate | 22.4% | 22.8% |
| Debt/Equity ratio | 1.15 | 1.15 |
| Cost of debt | 5.1% | 12.4% |
| After-tax WACC | 6.1% | 10.9% |
| Selected WACC | 8.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| BEN | Franklin Resources Inc | 1.15 | 0.78 | 0.41 |
| AMG | Affiliated Managers Group Inc | 0.52 | 0.82 | 0.59 |
| APO | Apollo Global Management Inc | 0.18 | 2.1 | 1.85 |
| ARCC | Ares Capital Corp | 0.96 | 0.67 | 0.39 |
| ARES | Ares Management Corp | 0.37 | 1.87 | 1.45 |
| CG | Carlyle Group Inc | 0.61 | 1.52 | 1.03 |
| IGM.TO | IGM Financial Inc | 1.09 | 0.93 | 0.5 |
| IVZ | Invesco Ltd | 1.1 | 1.26 | 0.68 |
| JHG | Janus Henderson Group PLC | 0.07 | 1.25 | 1.18 |
| NTRS | Northern Trust Corp | 7.3 | 1.01 | 0.15 |
| Low | High | |
| Unlevered beta | 0.55 | 0.82 |
| Relevered beta | 1.04 | 1.55 |
| Adjusted relevered beta | 1.03 | 1.37 |
BEN'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 BEN:
cost_of_equity (10.55%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.03) + 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.