ZUO
Zuora Inc
Price:  
10.02 
USD
Volume:  
26,286,588.00
United States | Software
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Zuora WACC - Weighted Average Cost of Capital

The WACC of Zuora Inc (ZUO) is 20.5%.

The Cost of Equity of Zuora Inc (ZUO) is 11.65%.
The Cost of Debt of Zuora Inc (ZUO) is 60.65%.

Range Selected
Cost of equity 10.10% - 13.20% 11.65%
Tax rate 2.20% - 2.90% 2.55%
Cost of debt 7.00% - 114.30% 60.65%
WACC 9.5% - 31.6% 20.5%
WACC

Zuora WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.35 1.49
Additional risk adjustments 0.0% 0.5%
Cost of equity 10.10% 13.20%
Tax rate 2.20% 2.90%
Debt/Equity ratio 0.23 0.23
Cost of debt 7.00% 114.30%
After-tax WACC 9.5% 31.6%
Selected WACC 20.5%

Zuora'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 Zuora:

cost_of_equity (11.65%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.35) + 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.