Coca-Cola WACC - Weighted Average Cost of Capital

The WACC of Coca-Cola Co (KO) is 6.4%.

The Cost of Equity of Coca-Cola Co (KO) is 6.85%.

The Cost of Debt of Coca-Cola Co (KO) is 4.45%.

	Range	Selected
Cost of equity	6.00% - 7.70%	6.85%
Tax rate	18.40% - 19.30%	18.85%
Cost of debt	4.00% - 4.90%	4.45%
WACC	5.6% - 7.2%	6.4%

WACC

Coca-Cola WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.46	0.51

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.00%	7.70%

Tax rate	18.40%	19.30%
Debt/Equity ratio	0.15	0.15
Cost of debt	4.00%	4.90%

After-tax WACC	5.6%	7.2%


Selected WACC	6.4%

Coca-Cola'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 Coca-Cola:

cost_of_equity (6.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.46) + 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.