TDG
TransDigm Group Inc
Price:  
1,450.28 
USD
Volume:  
384,982.00
United States | Aerospace & Defense
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TDG WACC - Weighted Average Cost of Capital

The WACC of TransDigm Group Inc (TDG) is 7.7%.

The Cost of Equity of TransDigm Group Inc (TDG) is 8.60%.
The Cost of Debt of TransDigm Group Inc (TDG) is 5.80%.

Range Selected
Cost of equity 7.40% - 9.80% 8.60%
Tax rate 18.20% - 22.80% 20.50%
Cost of debt 5.50% - 6.10% 5.80%
WACC 6.7% - 8.6% 7.7%
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 0.76 0.89
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.40% 9.80%
Tax rate 18.20% 22.80%
Debt/Equity ratio 0.31 0.31
Cost of debt 5.50% 6.10%
After-tax WACC 6.7% 8.6%
Selected WACC 7.7%

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 (8.60%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.76) + 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.