XRX
Xerox Holdings Corp
Price:  
3.88 
USD
Volume:  
5,102,475.00
United States | Technology Hardware, Storage & Peripherals
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Xerox WACC - Weighted Average Cost of Capital

The WACC of Xerox Holdings Corp (XRX) is 13.6%.

The Cost of Equity of Xerox Holdings Corp (XRX) is 20.35%.
The Cost of Debt of Xerox Holdings Corp (XRX) is 14.65%.

Range Selected
Cost of equity 16.80% - 23.90% 20.35%
Tax rate 6.60% - 15.30% 10.95%
Cost of debt 5.40% - 23.90% 14.65%
WACC 6.5% - 20.7% 13.6%
WACC

Xerox WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 2.82 3.39
Additional risk adjustments 0.0% 0.5%
Cost of equity 16.80% 23.90%
Tax rate 6.60% 15.30%
Debt/Equity ratio 7.13 7.13
Cost of debt 5.40% 23.90%
After-tax WACC 6.5% 20.7%
Selected WACC 13.6%

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 (20.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (2.82) + 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.