Xerox WACC - Weighted Average Cost of Capital
The WACC of Xerox Holdings Corp (XRX) is 13.1%.
| Range | Selected | |
| Cost of equity | 13.1% - 18.2% | 15.65% |
| Tax rate | 6.6% - 15.3% | 10.95% |
| Cost of debt | 5.4% - 23.9% | 14.65% |
| WACC | 6.4% - 19.9% | 13.1% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 2 | 2.38 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 13.1% | 18.2% |
| Tax rate | 6.6% | 15.3% |
| Debt/Equity ratio | 4.97 | 4.97 |
| Cost of debt | 5.4% | 23.9% |
| After-tax WACC | 6.4% | 19.9% |
| Selected WACC | 13.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| XRX | Xerox Holdings Corp | 4.97 | 1.74 | 0.31 |
| ALOT | AstroNova Inc | 0.7 | 0.65 | 0.4 |
| AVID | Avid Technology Inc | 0.15 | 1.16 | 1.02 |
| BRQS | Borqs Technologies Inc | 0.46 | 1.39 | 0.97 |
| DBD | Diebold Nixdorf Inc | 0.54 | 1.15 | 0.77 |
| IGOI | iGO Inc | 0.92 | 0.89 | 0.48 |
| NCR | NCR Corp | 1.49 | 1.48 | 0.63 |
| PMTS | CPI Card Group Inc | 1.25 | 1.83 | 0.86 |
| VCST | Viewcast.Com Inc | 548.65 | -1.12 | 0 |
| TECH.OL | Techstep ASA | 0.37 | 0.16 | 0.12 |
| Low | High | |
| Unlevered beta | 0.45 | 0.68 |
| Relevered beta | 2.49 | 3.06 |
| Adjusted relevered beta | 2 | 2.38 |
Xerox'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 Xerox:
cost_of_equity (15.65%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (2) + 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.