ORCL
Oracle Corp
Price:  
229.98 
USD
Volume:  
22,262,392
United States | Software

Oracle WACC - Weighted Average Cost of Capital

The WACC of Oracle Corp (ORCL) is 8.4%.

The Cost of Equity of Oracle Corp (ORCL) is 9.05%.
The Cost of Debt of Oracle Corp (ORCL) is 4.55%.

RangeSelected
Cost of equity7.0% - 11.1%9.05%
Tax rate9.2% - 11.4%10.3%
Cost of debt4.0% - 5.1%4.55%
WACC6.5% - 10.2%8.4%
WACC

Oracle WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta0.681.11
Additional risk adjustments0.0%0.5%
Cost of equity7.0%11.1%
Tax rate9.2%11.4%
Debt/Equity ratio
0.160.16
Cost of debt4.0%5.1%
After-tax WACC6.5%10.2%
Selected WACC8.4%

Oracle'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 Oracle:

cost_of_equity (9.05%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.68) + 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.