BWA
Borgwarner Inc
Price:  
33.15 
USD
Volume:  
1,508,827.00
United States | Auto Components
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Borgwarner WACC - Weighted Average Cost of Capital

The WACC of Borgwarner Inc (BWA) is 6.2%.

The Cost of Equity of Borgwarner Inc (BWA) is 7.80%.
The Cost of Debt of Borgwarner Inc (BWA) is 4.40%.

Range Selected
Cost of equity 6.40% - 9.20% 7.80%
Tax rate 21.50% - 25.00% 23.25%
Cost of debt 4.00% - 4.80% 4.40%
WACC 5.2% - 7.1% 6.2%
WACC

Borgwarner WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.54 0.77
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.40% 9.20%
Tax rate 21.50% 25.00%
Debt/Equity ratio 0.58 0.58
Cost of debt 4.00% 4.80%
After-tax WACC 5.2% 7.1%
Selected WACC 6.2%

Borgwarner'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 Borgwarner:

cost_of_equity (7.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.54) + 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.