CL
Colgate-Palmolive Co
Price:  
92.43 
USD
Volume:  
6,055,169.00
United States | Household Products
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CL WACC - Weighted Average Cost of Capital

The WACC of Colgate-Palmolive Co (CL) is 6.0%.

The Cost of Equity of Colgate-Palmolive Co (CL) is 6.30%.
The Cost of Debt of Colgate-Palmolive Co (CL) is 4.25%.

Range Selected
Cost of equity 5.50% - 7.10% 6.30%
Tax rate 23.70% - 25.00% 24.35%
Cost of debt 4.00% - 4.50% 4.25%
WACC 5.3% - 6.7% 6.0%
WACC

CL WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.35 0.4
Additional risk adjustments 0.0% 0.5%
Cost of equity 5.50% 7.10%
Tax rate 23.70% 25.00%
Debt/Equity ratio 0.11 0.11
Cost of debt 4.00% 4.50%
After-tax WACC 5.3% 6.7%
Selected WACC 6.0%

CL'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 CL:

cost_of_equity (6.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.35) + 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.