TDG
TransDigm Group Inc
Price:  
1,522.98 
USD
Volume:  
85,249.00
United States | Aerospace & Defense
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TDG WACC - Weighted Average Cost of Capital

The WACC of TransDigm Group Inc (TDG) is 7.9%.

The Cost of Equity of TransDigm Group Inc (TDG) is 8.90%.
The Cost of Debt of TransDigm Group Inc (TDG) is 5.80%.

Range Selected
Cost of equity 7.60% - 10.20% 8.90%
Tax rate 18.20% - 22.80% 20.50%
Cost of debt 5.50% - 6.10% 5.80%
WACC 6.9% - 9.0% 7.9%
WACC

TDG WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.81 0.96
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.60% 10.20%
Tax rate 18.20% 22.80%
Debt/Equity ratio 0.29 0.29
Cost of debt 5.50% 6.10%
After-tax WACC 6.9% 9.0%
Selected WACC 7.9%

TDG'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 TDG:

cost_of_equity (8.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.81) + 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.