EMR
Emerson Electric Co
Price:  
108.32 
USD
Volume:  
2,569,837.00
United States | Electrical Equipment
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EMR WACC - Weighted Average Cost of Capital

The WACC of Emerson Electric Co (EMR) is 8.5%.

The Cost of Equity of Emerson Electric Co (EMR) is 9.10%.
The Cost of Debt of Emerson Electric Co (EMR) is 4.25%.

Range Selected
Cost of equity 7.50% - 10.70% 9.10%
Tax rate 20.40% - 20.70% 20.55%
Cost of debt 4.00% - 4.50% 4.25%
WACC 7.1% - 9.9% 8.5%
WACC

EMR WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.8 1.03
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.50% 10.70%
Tax rate 20.40% 20.70%
Debt/Equity ratio 0.13 0.13
Cost of debt 4.00% 4.50%
After-tax WACC 7.1% 9.9%
Selected WACC 8.5%

EMR'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 EMR:

cost_of_equity (9.10%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.8) + 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.