IDCC WACC - Weighted Average Cost of Capital
The WACC of InterDigital Inc (IDCC) is 8.0%.
| Range | Selected | |
| Cost of equity | 7.3% - 9.5% | 8.4% |
| Tax rate | 19.2% - 21.3% | 20.25% |
| Cost of debt | 4.0% - 4.5% | 4.25% |
| WACC | 7.0% - 9.1% | 8.0% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.76 | 0.83 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.3% | 9.5% |
| Tax rate | 19.2% | 21.3% |
| Debt/Equity ratio | 0.09 | 0.09 |
| Cost of debt | 4.0% | 4.5% |
| After-tax WACC | 7.0% | 9.1% |
| Selected WACC | 8.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| IDCC | InterDigital Inc | 0.09 | 0.7 | 0.66 |
| AVYA | Avaya Holdings Corp | 118.74 | 1.41 | 0.01 |
| BDGY | Bridgeway National Corp. | 2254.16 | -0.73 | 0 |
| CGNT | Cognyte Software Ltd | 0 | 0.18 | 0.18 |
| CLSK | CleanSpark Inc | 0.03 | 2 | 1.96 |
| EPAY | Bottomline Technologies (DE) Inc | 0.05 | 1.27 | 1.22 |
| MODN | Model N Inc | 0.24 | 0.72 | 0.61 |
| MTC | MMTEC Inc | 1.24 | 2.02 | 1.02 |
| SPNS | Sapiens International Corporation NV | 0.03 | 0.79 | 0.77 |
| SSNC | SS&C Technologies Holdings Inc | 0.36 | 0.74 | 0.57 |
| Low | High | |
| Unlevered beta | 0.59 | 0.7 |
| Relevered beta | 0.64 | 0.75 |
| Adjusted relevered beta | 0.76 | 0.83 |
IDCC'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 IDCC:
cost_of_equity (8.40%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.76) + 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.