DXC
DXC Technology Co
Price:  
16.24 
USD
Volume:  
1,684,426.00
United States | IT Services
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DXC WACC - Weighted Average Cost of Capital

The WACC of DXC Technology Co (DXC) is 6.6%.

The Cost of Equity of DXC Technology Co (DXC) is 10.70%.
The Cost of Debt of DXC Technology Co (DXC) is 5.65%.

Range Selected
Cost of equity 8.40% - 13.00% 10.70%
Tax rate 36.70% - 38.40% 37.55%
Cost of debt 5.20% - 6.10% 5.65%
WACC 5.5% - 7.7% 6.6%
WACC

DXC WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.99 1.45
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.40% 13.00%
Tax rate 36.70% 38.40%
Debt/Equity ratio 1.32 1.32
Cost of debt 5.20% 6.10%
After-tax WACC 5.5% 7.7%
Selected WACC 6.6%

DXC'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 DXC:

cost_of_equity (10.70%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.99) + 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.