RXN
Rexnord Corp
Price:  
64.92 
USD
Volume:  
1,316,940.00
United States | Machinery
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RXN WACC - Weighted Average Cost of Capital

The WACC of Rexnord Corp (RXN) is 8.8%.

The Cost of Equity of Rexnord Corp (RXN) is 9.60%.
The Cost of Debt of Rexnord Corp (RXN) is 4.35%.

Range Selected
Cost of equity 8.20% - 11.00% 9.60%
Tax rate 22.60% - 23.10% 22.85%
Cost of debt 4.20% - 4.50% 4.35%
WACC 7.5% - 10.0% 8.8%
WACC

RXN WACC calculation

Category Low High
Long-term bond rate 3.2% 3.7%
Equity market risk premium 4.2% 5.2%
Adjusted beta 1.18 1.3
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.20% 11.00%
Tax rate 22.60% 23.10%
Debt/Equity ratio 0.15 0.15
Cost of debt 4.20% 4.50%
After-tax WACC 7.5% 10.0%
Selected WACC 8.8%

RXN'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 RXN:

cost_of_equity (9.60%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (1.18) + 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.