FTDR
Frontdoor Inc
Price:  
53.47 
USD
Volume:  
593,366.00
United States | Diversified Consumer Services
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FTDR WACC - Weighted Average Cost of Capital

The WACC of Frontdoor Inc (FTDR) is 6.8%.

The Cost of Equity of Frontdoor Inc (FTDR) is 7.70%.
The Cost of Debt of Frontdoor Inc (FTDR) is 5.15%.

Range Selected
Cost of equity 6.40% - 9.00% 7.70%
Tax rate 23.80% - 24.30% 24.05%
Cost of debt 4.80% - 5.50% 5.15%
WACC 5.7% - 7.8% 6.8%
WACC

FTDR WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.55 0.74
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.40% 9.00%
Tax rate 23.80% 24.30%
Debt/Equity ratio 0.32 0.32
Cost of debt 4.80% 5.50%
After-tax WACC 5.7% 7.8%
Selected WACC 6.8%

FTDR'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 FTDR:

cost_of_equity (7.70%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.55) + 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.