DE
Deere & Co
Price:  
469.11 
USD
Volume:  
1,786,318.00
United States | Machinery
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Deere WACC - Weighted Average Cost of Capital

The WACC of Deere & Co (DE) is 8.2%.

The Cost of Equity of Deere & Co (DE) is 10.25%.
The Cost of Debt of Deere & Co (DE) is 5.50%.

Range Selected
Cost of equity 8.70% - 11.80% 10.25%
Tax rate 22.00% - 22.30% 22.15%
Cost of debt 4.00% - 7.00% 5.50%
WACC 6.8% - 9.6% 8.2%
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 1.05 1.24
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.70% 11.80%
Tax rate 22.00% 22.30%
Debt/Equity ratio 0.51 0.51
Cost of debt 4.00% 7.00%
After-tax WACC 6.8% 9.6%
Selected WACC 8.2%

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 (10.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.05) + 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.