VREX WACC - Weighted Average Cost of Capital

The WACC of Varex Imaging Corp (VREX) is 7.9%.

The Cost of Equity of Varex Imaging Corp (VREX) is 11.15%.

The Cost of Debt of Varex Imaging Corp (VREX) is 9.25%.

	Range	Selected
Cost of equity	9.20% - 13.10%	11.15%
Tax rate	34.80% - 44.70%	39.75%
Cost of debt	6.10% - 12.40%	9.25%
WACC	6.3% - 9.6%	7.9%

WACC

VREX WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	1.17	1.47

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.20%	13.10%

Tax rate	34.80%	44.70%
Debt/Equity ratio	1.29	1.29
Cost of debt	6.10%	12.40%

After-tax WACC	6.3%	9.6%


Selected WACC	7.9%

VREX'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 VREX:

cost_of_equity (11.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.17) + 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.