TMHC
Taylor Morrison Home Corp
Price:  
58.90 
USD
Volume:  
744,703.00
United States | Household Durables
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TMHC WACC - Weighted Average Cost of Capital

The WACC of Taylor Morrison Home Corp (TMHC) is 7.7%.

The Cost of Equity of Taylor Morrison Home Corp (TMHC) is 9.05%.
The Cost of Debt of Taylor Morrison Home Corp (TMHC) is 5.00%.

Range Selected
Cost of equity 7.80% - 10.30% 9.05%
Tax rate 23.20% - 23.70% 23.45%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.8% - 8.6% 7.7%
WACC

TMHC WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.86 0.97
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.80% 10.30%
Tax rate 23.20% 23.70%
Debt/Equity ratio 0.36 0.36
Cost of debt 5.00% 5.00%
After-tax WACC 6.8% 8.6%
Selected WACC 7.7%

TMHC'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 TMHC:

cost_of_equity (9.05%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.86) + 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.