TEX
Terex Corp
Price:  
49.36 
USD
Volume:  
579,682.00
United States | Machinery
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Terex WACC - Weighted Average Cost of Capital

The WACC of Terex Corp (TEX) is 7.8%.

The Cost of Equity of Terex Corp (TEX) is 10.40%.
The Cost of Debt of Terex Corp (TEX) is 5.35%.

Range Selected
Cost of equity 8.60% - 12.20% 10.40%
Tax rate 17.80% - 18.00% 17.90%
Cost of debt 4.80% - 5.90% 5.35%
WACC 6.6% - 9.0% 7.8%
WACC

Terex WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.02 1.31
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.60% 12.20%
Tax rate 17.80% 18.00%
Debt/Equity ratio 0.76 0.76
Cost of debt 4.80% 5.90%
After-tax WACC 6.6% 9.0%
Selected WACC 7.8%

Terex'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 Terex:

cost_of_equity (10.40%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.02) + 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.