DE
Deere & Co
Price:  
520.97 
USD
Volume:  
470,320.00
United States | Machinery
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Deere WACC - Weighted Average Cost of Capital

The WACC of Deere & Co (DE) is 7.8%.

The Cost of Equity of Deere & Co (DE) is 9.65%.
The Cost of Debt of Deere & Co (DE) is 5.05%.

Range Selected
Cost of equity 8.10% - 11.20% 9.65%
Tax rate 22.00% - 22.30% 22.15%
Cost of debt 4.00% - 6.10% 5.05%
WACC 6.5% - 9.1% 7.8%
WACC

Deere WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.92 1.12
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.10% 11.20%
Tax rate 22.00% 22.30%
Debt/Equity ratio 0.46 0.46
Cost of debt 4.00% 6.10%
After-tax WACC 6.5% 9.1%
Selected WACC 7.8%

Deere'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 Deere:

cost_of_equity (9.65%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.92) + 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.