Xerox WACC - Weighted Average Cost of Capital

The WACC of Xerox Holdings Corp (XRX) is 13.2%.

The Cost of Equity of Xerox Holdings Corp (XRX) is 15.90%.

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

	Range	Selected
Cost of equity	13.40% - 18.40%	15.90%
Tax rate	6.60% - 15.30%	10.95%
Cost of debt	5.40% - 23.90%	14.65%
WACC	6.4% - 19.9%	13.2%

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	2.07	2.42

Additional risk adjustments	0.0%	0.5%
Cost of equity	13.40%	18.40%

Tax rate	6.60%	15.30%
Debt/Equity ratio	5.11	5.11
Cost of debt	5.40%	23.90%

After-tax WACC	6.4%	19.9%


Selected WACC	13.2%

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 (15.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (2.07) + 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.