TER
Teradyne Inc
Price:  
75.44 
USD
Volume:  
2,484,654.00
United States | Semiconductors & Semiconductor Equipment
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Teradyne WACC - Weighted Average Cost of Capital

The WACC of Teradyne Inc (TER) is 8.1%.

The Cost of Equity of Teradyne Inc (TER) is 12.20%.
The Cost of Debt of Teradyne Inc (TER) is 4.50%.

Range Selected
Cost of equity 10.10% - 14.30% 12.20%
Tax rate 12.80% - 13.60% 13.20%
Cost of debt 4.50% - 4.50% 4.50%
WACC 7.0% - 9.1% 8.1%
WACC

Teradyne WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.36 1.68
Additional risk adjustments 0.0% 0.5%
Cost of equity 10.10% 14.30%
Tax rate 12.80% 13.60%
Debt/Equity ratio 1 1
Cost of debt 4.50% 4.50%
After-tax WACC 7.0% 9.1%
Selected WACC 8.1%

Teradyne'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 Teradyne:

cost_of_equity (12.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.36) + 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.