ON
ON Semiconductor Corp
Price:  
41.91 
USD
Volume:  
14,132,924.00
United States | Semiconductors & Semiconductor Equipment
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ON WACC - Weighted Average Cost of Capital

The WACC of ON Semiconductor Corp (ON) is 9.6%.

The Cost of Equity of ON Semiconductor Corp (ON) is 10.75%.
The Cost of Debt of ON Semiconductor Corp (ON) is 4.25%.

Range Selected
Cost of equity 9.20% - 12.30% 10.75%
Tax rate 14.10% - 16.30% 15.20%
Cost of debt 4.00% - 4.50% 4.25%
WACC 8.3% - 11.0% 9.6%
WACC

ON WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.16 1.33
Additional risk adjustments 0.0% 0.5%
Cost of equity 9.20% 12.30%
Tax rate 14.10% 16.30%
Debt/Equity ratio 0.19 0.19
Cost of debt 4.00% 4.50%
After-tax WACC 8.3% 11.0%
Selected WACC 9.6%

ON'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 ON:

cost_of_equity (10.75%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.16) + 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.