FICO
Fair Isaac Corp
Price:  
2,060.86 
USD
Volume:  
115,816.00
United States | Software
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FICO WACC - Weighted Average Cost of Capital

The WACC of Fair Isaac Corp (FICO) is 8.0%.

The Cost of Equity of Fair Isaac Corp (FICO) is 8.15%.
The Cost of Debt of Fair Isaac Corp (FICO) is 4.95%.

Range Selected
Cost of equity 6.60% - 9.70% 8.15%
Tax rate 18.90% - 20.40% 19.65%
Cost of debt 4.90% - 5.00% 4.95%
WACC 6.5% - 9.5% 8.0%
WACC

FICO WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.6 0.87
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.60% 9.70%
Tax rate 18.90% 20.40%
Debt/Equity ratio 0.04 0.04
Cost of debt 4.90% 5.00%
After-tax WACC 6.5% 9.5%
Selected WACC 8.0%

FICO'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 FICO:

cost_of_equity (8.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.6) + 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.