RBBN WACC - Weighted Average Cost of Capital

The WACC of Ribbon Communications Inc (RBBN) is 10.4%.

The Cost of Equity of Ribbon Communications Inc (RBBN) is 8.90%.

The Cost of Debt of Ribbon Communications Inc (RBBN) is 15.50%.

	Range	Selected
Cost of equity	6.70% - 11.10%	8.90%
Tax rate	14.10% - 16.00%	15.05%
Cost of debt	7.10% - 23.90%	15.50%
WACC	6.5% - 14.4%	10.4%

WACC

RBBN WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.61	1.11

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.70%	11.10%

Tax rate	14.10%	16.00%
Debt/Equity ratio	0.59	0.59
Cost of debt	7.10%	23.90%

After-tax WACC	6.5%	14.4%


Selected WACC	10.4%

RBBN'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 RBBN:

cost_of_equity (8.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.61) + 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.