KTCC WACC - Weighted Average Cost of Capital

The WACC of Key Tronic Corp (KTCC) is 6.9%.

The Cost of Equity of Key Tronic Corp (KTCC) is 14.85%.

The Cost of Debt of Key Tronic Corp (KTCC) is 5.90%.

	Range	Selected
Cost of equity	11.40% - 18.30%	14.85%
Tax rate	14.20% - 21.30%	17.75%
Cost of debt	4.80% - 7.00%	5.90%
WACC	5.6% - 8.2%	6.9%

WACC

KTCC WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	1.64	2.4

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.40%	18.30%

Tax rate	14.20%	21.30%
Debt/Equity ratio	3.84	3.84
Cost of debt	4.80%	7.00%

After-tax WACC	5.6%	8.2%


Selected WACC	6.9%

KTCC'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 KTCC:

cost_of_equity (14.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.64) + 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.