DLTR
Dollar Tree Inc
Price:  
89.00 
USD
Volume:  
6,166,259.00
United States | Multiline Retail
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DLTR WACC - Weighted Average Cost of Capital

The WACC of Dollar Tree Inc (DLTR) is 6.8%.

The Cost of Equity of Dollar Tree Inc (DLTR) is 7.45%.
The Cost of Debt of Dollar Tree Inc (DLTR) is 4.45%.

Range Selected
Cost of equity 6.30% - 8.60% 7.45%
Tax rate 23.20% - 23.60% 23.40%
Cost of debt 4.30% - 4.60% 4.45%
WACC 5.9% - 7.8% 6.8%
WACC

DLTR WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.54 0.66
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.30% 8.60%
Tax rate 23.20% 23.60%
Debt/Equity ratio 0.19 0.19
Cost of debt 4.30% 4.60%
After-tax WACC 5.9% 7.8%
Selected WACC 6.8%

DLTR'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 DLTR:

cost_of_equity (7.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.54) + 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.