CBT
Cabot Corp
Price:  
76.59 
USD
Volume:  
393,126.00
United States | Chemicals
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CBT WACC - Weighted Average Cost of Capital

The WACC of Cabot Corp (CBT) is 7.6%.

The Cost of Equity of Cabot Corp (CBT) is 8.80%.
The Cost of Debt of Cabot Corp (CBT) is 4.90%.

Range Selected
Cost of equity 7.60% - 10.00% 8.80%
Tax rate 26.70% - 30.60% 28.65%
Cost of debt 4.80% - 5.00% 4.90%
WACC 6.7% - 8.6% 7.6%
WACC

CBT WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.81 0.92
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.60% 10.00%
Tax rate 26.70% 30.60%
Debt/Equity ratio 0.28 0.28
Cost of debt 4.80% 5.00%
After-tax WACC 6.7% 8.6%
Selected WACC 7.6%

CBT'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 CBT:

cost_of_equity (8.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.81) + 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.