TXT
Textron Inc
Price:  
85.39 
USD
Volume:  
1,316,125
United States | Aerospace & Defense

Textron WACC - Weighted Average Cost of Capital

The WACC of Textron Inc (TXT) is 7.7%.

The Cost of Equity of Textron Inc (TXT) is 8.6%.
The Cost of Debt of Textron Inc (TXT) is 4.4%.

RangeSelected
Cost of equity7.3% - 9.9%8.6%
Tax rate14.9% - 15.2%15.05%
Cost of debt4.0% - 4.8%4.4%
WACC6.6% - 8.8%7.7%
WACC

Textron WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta0.750.9
Additional risk adjustments0.0%0.5%
Cost of equity7.3%9.9%
Tax rate14.9%15.2%
Debt/Equity ratio
0.230.23
Cost of debt4.0%4.8%
After-tax WACC6.6%8.8%
Selected WACC7.7%

Textron'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 Textron:

cost_of_equity (8.60%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.75) + 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.