WTW
Willis Towers Watson PLC
Price:  
306.69 
USD
Volume:  
1,241,286
United Kingdom | Insurance

WTW WACC - Weighted Average Cost of Capital

The WACC of Willis Towers Watson PLC (WTW) is 7.3%.

The Cost of Equity of Willis Towers Watson PLC (WTW) is 7.9%.
The Cost of Debt of Willis Towers Watson PLC (WTW) is 4.6%.

RangeSelected
Cost of equity6.7% - 9.1%7.9%
Tax rate17.9% - 19.1%18.5%
Cost of debt4.4% - 4.8%4.6%
WACC6.2% - 8.3%7.3%
WACC

WTW WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta0.620.75
Additional risk adjustments0.0%0.5%
Cost of equity6.7%9.1%
Tax rate17.9%19.1%
Debt/Equity ratio
0.170.17
Cost of debt4.4%4.8%
After-tax WACC6.2%8.3%
Selected WACC7.3%

WTW WACC - Detailed calculations of Beta

LowHigh
Unlevered beta0.370.55
Relevered beta0.430.63
Adjusted relevered beta0.620.75

WTW'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 WTW:

cost_of_equity (7.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.62) + 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.