CRNC
Cerence Inc
Price:  
10.21 
USD
Volume:  
2,492,739.00
United States | Software
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CRNC WACC - Weighted Average Cost of Capital

The WACC of Cerence Inc (CRNC) is 8.0%.

The Cost of Equity of Cerence Inc (CRNC) is 10.20%.
The Cost of Debt of Cerence Inc (CRNC) is 6.55%.

Range Selected
Cost of equity 8.70% - 11.70% 10.20%
Tax rate 14.20% - 34.10% 24.15%
Cost of debt 4.00% - 9.10% 6.55%
WACC 6.6% - 9.4% 8.0%
WACC

CRNC WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.06 1.23
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.70% 11.70%
Tax rate 14.20% 34.10%
Debt/Equity ratio 0.69 0.69
Cost of debt 4.00% 9.10%
After-tax WACC 6.6% 9.4%
Selected WACC 8.0%

CRNC'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 CRNC:

cost_of_equity (10.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.06) + 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.