FARO
FARO Technologies Inc
Price:  
42.33 
USD
Volume:  
638,337.00
United States | Electronic Equipment, Instruments & Components
Valuation
Overview
Financials
Forecast
Compare
Historical Price
SolvencyDividends
Transactions
People

FARO WACC - Weighted Average Cost of Capital

The WACC of FARO Technologies Inc (FARO) is 16.9%.

The Cost of Equity of FARO Technologies Inc (FARO) is 9.80%.
The Cost of Debt of FARO Technologies Inc (FARO) is 135.15%.

Range Selected
Cost of equity 8.60% - 11.00% 9.80%
Tax rate 26.20% - 27.00% 26.60%
Cost of debt 12.40% - 257.90% 135.15%
WACC 8.6% - 25.2% 16.9%
WACC

FARO WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.02 1.1
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.60% 11.00%
Tax rate 26.20% 27.00%
Debt/Equity ratio 0.09 0.09
Cost of debt 12.40% 257.90%
After-tax WACC 8.6% 25.2%
Selected WACC 16.9%

FARO'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 FARO:

cost_of_equity (9.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.02) + 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.