MSI
Motorola Solutions Inc
Price:  
406.42 
USD
Volume:  
2,340,531.00
United States | Communications Equipment
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Motorola WACC - Weighted Average Cost of Capital

The WACC of Motorola Solutions Inc (MSI) is 6.9%.

The Cost of Equity of Motorola Solutions Inc (MSI) is 7.15%.
The Cost of Debt of Motorola Solutions Inc (MSI) is 4.30%.

Range Selected
Cost of equity 6.30% - 8.00% 7.15%
Tax rate 19.20% - 19.60% 19.40%
Cost of debt 4.00% - 4.60% 4.30%
WACC 6.1% - 7.7% 6.9%
WACC

Motorola WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.54 0.57
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.30% 8.00%
Tax rate 19.20% 19.60%
Debt/Equity ratio 0.09 0.09
Cost of debt 4.00% 4.60%
After-tax WACC 6.1% 7.7%
Selected WACC 6.9%

Motorola'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 Motorola:

cost_of_equity (7.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.54) + 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.