TXN
Texas Instruments Inc
Price:  
162.42 
USD
Volume:  
4,802,365.00
United States | Semiconductors & Semiconductor Equipment
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TXN WACC - Weighted Average Cost of Capital

The WACC of Texas Instruments Inc (TXN) is 9.7%.

The Cost of Equity of Texas Instruments Inc (TXN) is 10.20%.
The Cost of Debt of Texas Instruments Inc (TXN) is 5.00%.

Range Selected
Cost of equity 8.60% - 11.80% 10.20%
Tax rate 12.10% - 12.50% 12.30%
Cost of debt 5.00% - 5.00% 5.00%
WACC 8.3% - 11.2% 9.7%
WACC

TXN WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.04 1.24
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.60% 11.80%
Tax rate 12.10% 12.50%
Debt/Equity ratio 0.09 0.09
Cost of debt 5.00% 5.00%
After-tax WACC 8.3% 11.2%
Selected WACC 9.7%

TXN'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 TXN:

cost_of_equity (10.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.04) + 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.