TXT
Textron Inc
Price:  
85.39 
USD
Volume:  
1,316,125.00
United States | Aerospace & Defense
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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 8.60%.
The Cost of Debt of Textron Inc (TXT) is 4.40%.

Range Selected
Cost of equity 7.30% - 9.90% 8.60%
Tax rate 14.90% - 15.20% 15.05%
Cost of debt 4.00% - 4.80% 4.40%
WACC 6.6% - 8.8% 7.7%
WACC

Textron WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.75 0.9
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.30% 9.90%
Tax rate 14.90% 15.20%
Debt/Equity ratio 0.23 0.23
Cost of debt 4.00% 4.80%
After-tax WACC 6.6% 8.8%
Selected WACC 7.7%

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.