Need help withthe followingdiscussion assignment:

In Activity 6.2.4 you were exposed to the Cost of Capital by Sector(Links to an external site.). One of the columns provides the percentage of debt financing by industry (D/(D+E)). There are several industries with low percentages of debt financing. Take a look and identify some with a low percentage of debt financing and do the same with firms that have a high percentage of debt financing (the average according to the data in the link is about 42 percent).

Note: Do not use the banking financial services industries.

Based on the types of firms that use a small amount of debt and those that use higher amounts of debt, what can you conclude? What is it about the firms that use low amounts of debt? More debt would lower their cost of capital so what is holding these firms back form taking on more debt? You need to think a little, do not simply say the firms with low debt are all in industry x or industries similar to x. That is obvious, what is the economic intuition? What is the story?

Cost of Capital Cost of Capital by Sector (US) Data Used: Multiple data services Date of Analysis: Data used is as of January 2015 Download as an excel file instead: http://www.stern.nyu.edu/~adamodar/pc/datasets/wacc.xls For global datasets: http://www.stern.nyu.edu/~adamodar/New_Home_Page/data.html can be obtained by clicking here on which companies are included in each industry Number of Firms Beta Cost of Equity E/(D+E) Std Dev in Sto Cost of Debt Tax Rate After-tax Cost D/(D+E) Cost of Capital Advertising Industry Name 52 1.18 8.96% 66.39% 51.52% 3.67% 4.13% 2.20% 33.61% 6.69% Aerospace/Defense 93 1.16 8.84% 84.07% 50.15% 3.67% 14.87% 3.12% 15.93% 7.93% Air Transport 22 0.98 7.80% 55.09% 53.32% 3.67% 18.71% 2.98% 44.91% 5.64% Apparel 64 0.99 7.88% 82.83% 56.24% 3.67% 11.16% 3.26% 17.17% 7.09% Auto & Truck 22 1.09 8.47% 48.56% 43.52% 3.17% 4.45% 3.03% 51.44% 5.67% Auto Parts 75 1.35 9.92% 77.73% 53.89% 3.67% 11.05% 3.26% 22.27% 8.44% Bank (Money Center) 13 0.81 6.81% 31.38% 39.98% 3.17% 26.43% 2.33% 68.62% 3.74% Banks (Regional) 676 0.53 5.20% 56.28% 37.41% 3.17% 20.66% 2.52% 43.72% 4.02% Beverage (Alcoholic) 22 1.06 8.24% 82.05% 55.14% 3.67% 8.54% 3.36% 17.95% 7.36% Beverage (Soft) 46 1.14 8.71% 81.27% 61.94% 3.67% 5.55% 3.47% 18.73% 7.73% Broadcasting 28 1.30 9.62% 58.46% 62.12% 3.67% 18.34% 3.00% 41.54% 6.87% Brokerage & Investment Banking 46 1.16 8.84% 24.78% 44.77% 3.17% 13.99% 2.73% 75.22% 4.24% Building Materials 39 1.12 8.59% 75.62% 43.52% 3.17% 17.45% 2.62% 24.38% 7.13% Business & Consumer Services 177 1.19 9.03% 76.68% 52.77% 3.67% 13.30% 3.18% 23.32% 7.67% Cable TV 18 0.91 7.42% 69.06% 52.83% 3.67% 21.18% 2.89% 30.94% 6.02% Chemical (Basic) 46 0.94 7.55% 71.27% 50.32% 3.67% 10.88% 3.27% 28.73% 6.32% Chemical (Diversified) 10 1.17 8.91% 75.08% 41.14% 3.17% 22.47% 2.46% 24.92% 7.30% Chemical (Specialty) 103 1.03 8.07% 82.40% 51.80% 3.67% 11.16% 3.26% 17.60% 7.22% Coal & Related Energy 42 1.64 11.61% 47.53% 74.62% 4.17% 0.99% 4.13% 52.47% 7.69% Computer Services 119 1.16 8.84% 78.39% 59.41% 3.67% 10.48% 3.29% 21.61% 7.64% Computers/Peripherals 64 1.21 9.13% 91.35% 66.35% 4.17% 7.35% 3.86% 8.65% 8.68% Construction Supplies 55 1.60 11.37% 68.78% 47.26% 3.17% 16.28% 2.65% 31.22% 8.65% Diversified 23 1.00 7.91% 62.16% 32.85% 3.17% 13.96% 2.73% 37.84% 5.95% Drugs (Biotechnology) 400 1.10 8.52% 92.18% 93.06% 5.17% 1.48% 5.09% 7.82% 8.25% Drugs (Pharmaceutical) 151 1.03 8.08% 88.17% 75.04% 4.17% 4.58% 3.98% 11.83% 7.59% Education 42 1.13 8.65% 71.72% 70.19% 4.17% 12.18% 3.66% 28.28% 7.24% Electrical Equipment 126 1.24 9.29% 85.57% 65.34% 4.17% 5.99% 3.92% 14.43% 8.51% Electronics (Consumer & Office) 28 1.37 10.06% 95.76% 56.16% 3.67% 4.50% 3.50% 4.24% 9.78% Electronics (General) 189 1.03 8.08% 87.19% 69.01% 4.17% 8.64% 3.81% 12.81% 7.53% Engineering/Construction 56 1.31 9.69% 78.55% 47.91% 3.17% 14.18% 2.72% 21.45% 8.19% Entertainment 84 1.21 9.10% 78.42% 58.48% 3.67% 4.11% 3.52% 21.58% 7.90% Environmental & Waste Services 103 1.28 9.56% 71.14% 65.61% 4.17% 6.31% 3.91% 28.86% 7.92% Farming/Agriculture 37 0.84 7.02% 62.32% 41.59% 3.17% 9.36% 2.87% 37.68% 5.46% Financial Svcs. (Non-bank & Insurance) 288 0.67 6.01% 7.65% 38.80% 3.17% 18.49% 2.58% 92.35% 2.85% Food Processing 96 0.99 7.88% 78.61% 42.05% 3.17% 13.70% 2.74% 21.39% 6.78% Food Wholesalers 14 1.41 10.29% 85.40% 35.73% 3.17% 13.47% 2.74% 14.60% 9.19% Furn/Home Furnishings 27 1.09 8.44% 78.98% 54.24% 3.67% 14.48% 3.14% 21.02% 7.32% Green & Renewable Energy 26 1.32 9.76% 47.63% 53.18% 3.67% 1.94% 3.60% 52.37% 6.53% Healthcare Products 261 0.99 7.86% 86.46% 64.48% 3.67% 6.73% 3.42% 13.54% 7.26% Healthcare Support Services 138 1.05 8.23% 78.95% 46.72% 3.17% 13.27% 2.75% 21.05% 7.08% Heathcare Information and Technology 127 0.95 7.63% 83.51% 70.49% 4.17% 6.35% 3.91% 16.49% 7.02% Homebuilding 35 1.29 9.57% 62.20% 53.78% 3.67% 18.11% 3.01% 37.80% 7.09% Hospitals/Healthcare Facilities 56 0.97 7.76% 56.95% 43.11% 3.17% 10.93% 2.82% 43.05% 5.64% Hotel/Gaming 80 1.18 8.96% 64.67% 49.55% 3.17% 11.41% 2.81% 35.33% 6.79% http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/wacc.htm[9/25/2015 12:32:34 PM] Cost of Capital Household Products 135 1.03 8.08% 84.11% 61.63% 3.67% 10.46% 3.29% 15.89% 7.32% Information Services 67 1.11 8.58% 88.25% 42.71% 3.17% 17.93% 2.60% 11.75% 7.88% Insurance (General) 24 1.03 8.09% 69.91% 35.35% 3.17% 19.21% 2.56% 30.09% 6.43% Insurance (Life) 25 1.04 8.16% 58.40% 34.48% 3.17% 24.30% 2.40% 41.60% 5.76% Insurance (Prop/Cas.) 52 0.83 6.94% 75.24% 36.73% 3.17% 22.18% 2.47% 24.76% 5.83% Investments & Asset Management 148 1.10 8.48% 57.45% 41.63% 3.17% 6.84% 2.95% 42.55% 6.13% Machinery 137 1.23 9.22% 83.03% 46.22% 3.17% 15.64% 2.67% 16.97% 8.11% Metals & Mining 124 1.28 9.54% 66.36% 74.49% 4.17% 1.80% 4.10% 33.64% 7.71% Office Equipment & Services 25 1.34 9.89% 65.84% 49.87% 3.17% 18.65% 2.58% 34.16% 7.39% Oil/Gas (Integrated) 8 0.81 6.81% 90.04% 33.56% 3.17% 14.56% 2.71% 9.96% 6.41% Oil/Gas (Production and Exploration) 392 1.27 9.45% 67.49% 71.93% 4.17% 7.04% 3.88% 32.51% 7.64% Oil/Gas Distribution 85 0.96 7.71% 67.68% 43.15% 3.17% 4.68% 3.02% 32.32% 6.20% Oilfield Svcs/Equip. 161 1.54 11.04% 78.35% 65.23% 4.17% 10.99% 3.71% 21.65% 9.46% Packaging & Container 26 0.95 7.62% 67.30% 31.06% 3.17% 18.18% 2.59% 32.70% 5.97% Paper/Forest Products 22 0.84 6.97% 66.22% 44.94% 3.17% 11.54% 2.80% 33.78% 5.57% Power 82 0.83 6.94% 56.90% 29.70% 3.17% 20.77% 2.51% 43.10% 5.03% Precious Metals 147 1.29 9.61% 71.02% 93.69% 5.17% 1.33% 5.10% 28.98% 8.30% Publshing & Newspapers 43 1.15 8.77% 67.85% 50.42% 3.67% 14.93% 3.12% 32.15% 6.95% R.E.I.T. 213 0.79 6.69% 53.05% 31.55% 3.17% 1.24% 3.13% 46.95% 5.02% Real Estate (Development) 18 1.02 8.04% 68.77% 43.65% 3.17% 7.21% 2.94% 31.23% 6.45% Real Estate (General/Diversified) 11 1.82 12.63% 78.39% 45.97% 3.17% 9.39% 2.87% 21.61% 10.52% Real Estate (Operations & Services) 52 1.30 9.66% 63.56% 50.05% 3.67% 8.63% 3.35% 36.44% 7.36% Recreation 68 1.21 9.14% 75.97% 50.41% 3.67% 11.25% 3.26% 24.03% 7.72% Reinsurance 4 1.35 9.91% 72.68% 21.20% 2.67% 15.53% 2.26% 27.32% 7.82% Restaurant/Dining 79 0.89 7.30% 78.20% 44.43% 3.17% 15.14% 2.69% 21.80% 6.30% Retail (Automotive) 30 1.18 8.93% 66.58% 48.06% 3.17% 18.76% 2.58% 33.42% 6.81% Retail (Building Supply) 5 1.44 10.46% 83.71% 50.71% 3.67% 30.64% 2.55% 16.29% 9.17% Retail (Distributors) 90 1.12 8.58% 67.57% 52.06% 3.67% 16.84% 3.05% 32.43% 6.79% Retail (General) 23 1.03 8.10% 76.12% 46.36% 3.17% 21.36% 2.49% 23.88% 6.76% Retail (Grocery and Food) 21 1.05 8.20% 64.05% 51.83% 3.67% 22.94% 2.83% 35.95% 6.27% Retail (Online) 46 1.40 10.19% 93.01% 70.16% 4.17% 9.38% 3.78% 6.99% 9.74% Retail (Special Lines) 6.76% 128 1.07 8.35% 70.70% 51.42% 3.67% 20.44% 2.92% 29.30% Rubber& Tires 4 1.02 8.04% 53.26% 49.54% 3.17% 13.58% 2.74% 46.74% 5.56% Semiconductor 100 1.21 9.15% 90.29% 57.12% 3.67% 10.11% 3.30% 9.71% 8.58% Semiconductor Equip 47 1.23 9.26% 85.01% 60.18% 3.67% 6.88% 3.42% 14.99% 8.38% Shipbuilding & Marine 14 1.36 10.00% 65.10% 71.45% 4.17% 6.75% 3.89% 34.90% 7.87% Shoe 13 0.84 7.01% 93.16% 40.80% 3.17% 20.15% 2.53% 6.84% 6.71% Software (Entertainment) 20 1.12 8.58% 85.25% 69.84% 4.17% 1.46% 4.11% 14.75% 7.92% Software (Internet) 327 1.29 9.57% 94.71% 72.48% 4.17% 5.07% 3.96% 5.29% 9.27% Software (System & Application) 259 1.10 8.52% 91.16% 61.85% 3.67% 6.86% 3.42% 8.84% 8.07% Steel 40 1.31 9.72% 60.96% 52.45% 3.67% 13.99% 3.16% 39.04% 7.16% Telecom (Wireless) 21 1.15 8.78% 39.31% 53.05% 3.67% 5.76% 3.46% 60.69% 5.55% Telecom. Equipment 126 1.24 9.32% 89.51% 62.74% 3.67% 8.70% 3.35% 10.49% 8.69% Telecom. Services 77 1.07 8.31% 60.45% 55.60% 3.67% 11.83% 3.24% 39.55% 6.31% Tobacco 20 1.09 8.41% 83.51% 41.74% 3.17% 12.39% 2.78% 16.49% 7.48% Transportation 21 0.86 7.10% 82.62% 42.36% 3.17% 20.08% 2.53% 17.38% 6.31% Transportation (Railroads) 10 1.05 8.19% 83.19% 30.73% 3.17% 21.30% 2.49% 16.81% 7.24% Trucking 30 1.32 9.78% 60.00% 48.49% 3.17% 27.38% 2.30% 40.00% 6.79% Unclassified 8 0.10 2.77% 79.20% NA #N/A 3.93% #N/A 20.80% #N/A Utility (General) 21 0.59 5.58% 62.00% 23.02% 2.67% 30.59% 1.85% 38.00% 4.16% Utility (Water) 19 1.09 8.41% 66.59% 38.21% 3.17% 15.10% 2.69% 33.41% 6.50% Total Market 7887 1.06 8.29% 60.19% 53.60% 3.67% 10.76% 3.28% 39.81% 6.29% Last Updated in January 2015 By Aswath Damodaran http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/wacc.htm[9/25/2015 12:32:34 PM] Cost of Capital Cost of Capital by Sector (US) Data Used: Multiple data services Date of Analysis: Data used is as of January 2015 Download as an excel file instead: http://www.stern.nyu.edu/~adamodar/pc/datasets/wacc.xls For global datasets: http://www.stern.nyu.edu/~adamodar/New_Home_Page/data.html can be obtained by clicking here on which companies are included in each industry Number of Firms Beta Cost of Equity E/(D+E) Std Dev in Sto Cost of Debt Tax Rate After-tax Cost D/(D+E) Cost of Capital Advertising Industry Name 52 1.18 8.96% 66.39% 51.52% 3.67% 4.13% 2.20% 33.61% 6.69% Aerospace/Defense 93 1.16 8.84% 84.07% 50.15% 3.67% 14.87% 3.12% 15.93% 7.93% Air Transport 22 0.98 7.80% 55.09% 53.32% 3.67% 18.71% 2.98% 44.91% 5.64% Apparel 64 0.99 7.88% 82.83% 56.24% 3.67% 11.16% 3.26% 17.17% 7.09% Auto & Truck 22 1.09 8.47% 48.56% 43.52% 3.17% 4.45% 3.03% 51.44% 5.67% Auto Parts 75 1.35 9.92% 77.73% 53.89% 3.67% 11.05% 3.26% 22.27% 8.44% Bank (Money Center) 13 0.81 6.81% 31.38% 39.98% 3.17% 26.43% 2.33% 68.62% 3.74% Banks (Regional) 676 0.53 5.20% 56.28% 37.41% 3.17% 20.66% 2.52% 43.72% 4.02% Beverage (Alcoholic) 22 1.06 8.24% 82.05% 55.14% 3.67% 8.54% 3.36% 17.95% 7.36% Beverage (Soft) 46 1.14 8.71% 81.27% 61.94% 3.67% 5.55% 3.47% 18.73% 7.73% Broadcasting 28 1.30 9.62% 58.46% 62.12% 3.67% 18.34% 3.00% 41.54% 6.87% Brokerage & Investment Banking 46 1.16 8.84% 24.78% 44.77% 3.17% 13.99% 2.73% 75.22% 4.24% Building Materials 39 1.12 8.59% 75.62% 43.52% 3.17% 17.45% 2.62% 24.38% 7.13% Business & Consumer Services 177 1.19 9.03% 76.68% 52.77% 3.67% 13.30% 3.18% 23.32% 7.67% Cable TV 18 0.91 7.42% 69.06% 52.83% 3.67% 21.18% 2.89% 30.94% 6.02% Chemical (Basic) 46 0.94 7.55% 71.27% 50.32% 3.67% 10.88% 3.27% 28.73% 6.32% Chemical (Diversified) 10 1.17 8.91% 75.08% 41.14% 3.17% 22.47% 2.46% 24.92% 7.30% Chemical (Specialty) 103 1.03 8.07% 82.40% 51.80% 3.67% 11.16% 3.26% 17.60% 7.22% Coal & Related Energy 42 1.64 11.61% 47.53% 74.62% 4.17% 0.99% 4.13% 52.47% 7.69% Computer Services 119 1.16 8.84% 78.39% 59.41% 3.67% 10.48% 3.29% 21.61% 7.64% Computers/Peripherals 64 1.21 9.13% 91.35% 66.35% 4.17% 7.35% 3.86% 8.65% 8.68% Construction Supplies 55 1.60 11.37% 68.78% 47.26% 3.17% 16.28% 2.65% 31.22% 8.65% Diversified 23 1.00 7.91% 62.16% 32.85% 3.17% 13.96% 2.73% 37.84% 5.95% Drugs (Biotechnology) 400 1.10 8.52% 92.18% 93.06% 5.17% 1.48% 5.09% 7.82% 8.25% Drugs (Pharmaceutical) 151 1.03 8.08% 88.17% 75.04% 4.17% 4.58% 3.98% 11.83% 7.59% Education 42 1.13 8.65% 71.72% 70.19% 4.17% 12.18% 3.66% 28.28% 7.24% Electrical Equipment 126 1.24 9.29% 85.57% 65.34% 4.17% 5.99% 3.92% 14.43% 8.51% Electronics (Consumer & Office) 28 1.37 10.06% 95.76% 56.16% 3.67% 4.50% 3.50% 4.24% 9.78% Electronics (General) 189 1.03 8.08% 87.19% 69.01% 4.17% 8.64% 3.81% 12.81% 7.53% Engineering/Construction 56 1.31 9.69% 78.55% 47.91% 3.17% 14.18% 2.72% 21.45% 8.19% Entertainment 84 1.21 9.10% 78.42% 58.48% 3.67% 4.11% 3.52% 21.58% 7.90% Environmental & Waste Services 103 1.28 9.56% 71.14% 65.61% 4.17% 6.31% 3.91% 28.86% 7.92% Farming/Agriculture 37 0.84 7.02% 62.32% 41.59% 3.17% 9.36% 2.87% 37.68% 5.46% Financial Svcs. (Non-bank & Insurance) 288 0.67 6.01% 7.65% 38.80% 3.17% 18.49% 2.58% 92.35% 2.85% Food Processing 96 0.99 7.88% 78.61% 42.05% 3.17% 13.70% 2.74% 21.39% 6.78% Food Wholesalers 14 1.41 10.29% 85.40% 35.73% 3.17% 13.47% 2.74% 14.60% 9.19% Furn/Home Furnishings 27 1.09 8.44% 78.98% 54.24% 3.67% 14.48% 3.14% 21.02% 7.32% Green & Renewable Energy 26 1.32 9.76% 47.63% 53.18% 3.67% 1.94% 3.60% 52.37% 6.53% Healthcare Products 261 0.99 7.86% 86.46% 64.48% 3.67% 6.73% 3.42% 13.54% 7.26% Healthcare Support Services 138 1.05 8.23% 78.95% 46.72% 3.17% 13.27% 2.75% 21.05% 7.08% Heathcare Information and Technology 127 0.95 7.63% 83.51% 70.49% 4.17% 6.35% 3.91% 16.49% 7.02% Homebuilding 35 1.29 9.57% 62.20% 53.78% 3.67% 18.11% 3.01% 37.80% 7.09% Hospitals/Healthcare Facilities 56 0.97 7.76% 56.95% 43.11% 3.17% 10.93% 2.82% 43.05% 5.64% Hotel/Gaming 80 1.18 8.96% 64.67% 49.55% 3.17% 11.41% 2.81% 35.33% 6.79% http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/wacc.htm[9/25/2015 12:32:34 PM] Cost of Capital Household Products 135 1.03 8.08% 84.11% 61.63% 3.67% 10.46% 3.29% 15.89% 7.32% Information Services 67 1.11 8.58% 88.25% 42.71% 3.17% 17.93% 2.60% 11.75% 7.88% Insurance (General) 24 1.03 8.09% 69.91% 35.35% 3.17% 19.21% 2.56% 30.09% 6.43% Insurance (Life) 25 1.04 8.16% 58.40% 34.48% 3.17% 24.30% 2.40% 41.60% 5.76% Insurance (Prop/Cas.) 52 0.83 6.94% 75.24% 36.73% 3.17% 22.18% 2.47% 24.76% 5.83% Investments & Asset Management 148 1.10 8.48% 57.45% 41.63% 3.17% 6.84% 2.95% 42.55% 6.13% Machinery 137 1.23 9.22% 83.03% 46.22% 3.17% 15.64% 2.67% 16.97% 8.11% Metals & Mining 124 1.28 9.54% 66.36% 74.49% 4.17% 1.80% 4.10% 33.64% 7.71% Office Equipment & Services 25 1.34 9.89% 65.84% 49.87% 3.17% 18.65% 2.58% 34.16% 7.39% Oil/Gas (Integrated) 8 0.81 6.81% 90.04% 33.56% 3.17% 14.56% 2.71% 9.96% 6.41% Oil/Gas (Production and Exploration) 392 1.27 9.45% 67.49% 71.93% 4.17% 7.04% 3.88% 32.51% 7.64% Oil/Gas Distribution 85 0.96 7.71% 67.68% 43.15% 3.17% 4.68% 3.02% 32.32% 6.20% Oilfield Svcs/Equip. 161 1.54 11.04% 78.35% 65.23% 4.17% 10.99% 3.71% 21.65% 9.46% Packaging & Container 26 0.95 7.62% 67.30% 31.06% 3.17% 18.18% 2.59% 32.70% 5.97% Paper/Forest Products 22 0.84 6.97% 66.22% 44.94% 3.17% 11.54% 2.80% 33.78% 5.57% Power 82 0.83 6.94% 56.90% 29.70% 3.17% 20.77% 2.51% 43.10% 5.03% Precious Metals 147 1.29 9.61% 71.02% 93.69% 5.17% 1.33% 5.10% 28.98% 8.30% Publshing & Newspapers 43 1.15 8.77% 67.85% 50.42% 3.67% 14.93% 3.12% 32.15% 6.95% R.E.I.T. 213 0.79 6.69% 53.05% 31.55% 3.17% 1.24% 3.13% 46.95% 5.02% Real Estate (Development) 18 1.02 8.04% 68.77% 43.65% 3.17% 7.21% 2.94% 31.23% 6.45% Real Estate (General/Diversified) 11 1.82 12.63% 78.39% 45.97% 3.17% 9.39% 2.87% 21.61% 10.52% Real Estate (Operations & Services) 52 1.30 9.66% 63.56% 50.05% 3.67% 8.63% 3.35% 36.44% 7.36% Recreation 68 1.21 9.14% 75.97% 50.41% 3.67% 11.25% 3.26% 24.03% 7.72% Reinsurance 4 1.35 9.91% 72.68% 21.20% 2.67% 15.53% 2.26% 27.32% 7.82% Restaurant/Dining 79 0.89 7.30% 78.20% 44.43% 3.17% 15.14% 2.69% 21.80% 6.30% Retail (Automotive) 30 1.18 8.93% 66.58% 48.06% 3.17% 18.76% 2.58% 33.42% 6.81% Retail (Building Supply) 5 1.44 10.46% 83.71% 50.71% 3.67% 30.64% 2.55% 16.29% 9.17% Retail (Distributors) 90 1.12 8.58% 67.57% 52.06% 3.67% 16.84% 3.05% 32.43% 6.79% Retail (General) 23 1.03 8.10% 76.12% 46.36% 3.17% 21.36% 2.49% 23.88% 6.76% Retail (Grocery and Food) 21 1.05 8.20% 64.05% 51.83% 3.67% 22.94% 2.83% 35.95% 6.27% Retail (Online) 46 1.40 10.19% 93.01% 70.16% 4.17% 9.38% 3.78% 6.99% 9.74% Retail (Special Lines) 6.76% 128 1.07 8.35% 70.70% 51.42% 3.67% 20.44% 2.92% 29.30% Rubber& Tires 4 1.02 8.04% 53.26% 49.54% 3.17% 13.58% 2.74% 46.74% 5.56% Semiconductor 100 1.21 9.15% 90.29% 57.12% 3.67% 10.11% 3.30% 9.71% 8.58% Semiconductor Equip 47 1.23 9.26% 85.01% 60.18% 3.67% 6.88% 3.42% 14.99% 8.38% Shipbuilding & Marine 14 1.36 10.00% 65.10% 71.45% 4.17% 6.75% 3.89% 34.90% 7.87% Shoe 13 0.84 7.01% 93.16% 40.80% 3.17% 20.15% 2.53% 6.84% 6.71% Software (Entertainment) 20 1.12 8.58% 85.25% 69.84% 4.17% 1.46% 4.11% 14.75% 7.92% Software (Internet) 327 1.29 9.57% 94.71% 72.48% 4.17% 5.07% 3.96% 5.29% 9.27% Software (System & Application) 259 1.10 8.52% 91.16% 61.85% 3.67% 6.86% 3.42% 8.84% 8.07% Steel 40 1.31 9.72% 60.96% 52.45% 3.67% 13.99% 3.16% 39.04% 7.16% Telecom (Wireless) 21 1.15 8.78% 39.31% 53.05% 3.67% 5.76% 3.46% 60.69% 5.55% Telecom. Equipment 126 1.24 9.32% 89.51% 62.74% 3.67% 8.70% 3.35% 10.49% 8.69% Telecom. Services 77 1.07 8.31% 60.45% 55.60% 3.67% 11.83% 3.24% 39.55% 6.31% Tobacco 20 1.09 8.41% 83.51% 41.74% 3.17% 12.39% 2.78% 16.49% 7.48% Transportation 21 0.86 7.10% 82.62% 42.36% 3.17% 20.08% 2.53% 17.38% 6.31% Transportation (Railroads) 10 1.05 8.19% 83.19% 30.73% 3.17% 21.30% 2.49% 16.81% 7.24% Trucking 30 1.32 9.78% 60.00% 48.49% 3.17% 27.38% 2.30% 40.00% 6.79% Unclassified 8 0.10 2.77% 79.20% NA #N/A 3.93% #N/A 20.80% #N/A Utility (General) 21 0.59 5.58% 62.00% 23.02% 2.67% 30.59% 1.85% 38.00% 4.16% Utility (Water) 19 1.09 8.41% 66.59% 38.21% 3.17% 15.10% 2.69% 33.41% 6.50% Total Market 7887 1.06 8.29% 60.19% 53.60% 3.67% 10.76% 3.28% 39.81% 6.29% Last Updated in January 2015 By Aswath Damodaran http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/wacc.htm[9/25/2015 12:32:34 PM] Cost of Capital http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/wacc.htm[9/25/2015 12:32:34 PM] Cost of Capital by Sector (US) Data Used: Multiple data services Date of Analysis: Data used is as of January 2015 Download as an excel file instead: http://www.stern.nyu.edu/~adamodar/pc/datasets/wacc.xls For global datasets: http://www.stern.nyu.edu/~adamodar/New_Home_Page/data.html can be obtained by clicking here on which companies are included in each industry Industry Name Number of Firms Beta Cost of Equity E/(D+E) Std Dev in Sto Cost of Debt Tax Rate After-tax Cost D/(D+E) Cost of Capital Advertising 52 1.18 8.96% 66.39% 51.52% 3.67% 4.13% 2.20% 33.61% 6.69% Aerospace/Defense 93 1.16 8.84% 84.07% 50.15% 3.67% 14.87% 3.12% 15.93% 7.93% Air Transport 22 0.98 7.80% 55.09% 53.32% 3.67% 18.71% 2.98% 44.91% 5.64% Apparel 64 0.99 7.88% 82.83% 56.24% 3.67% 11.16% 3.26% 17.17% 7.09% Auto & Truck 22 1.09 8.47% 48.56% 43.52% 3.17% 4.45% 3.03% 51.44% 5.67% Auto Parts 75 1.35 9.92% 77.73% 53.89% 3.67% 11.05% 3.26% 22.27% 8.44% Bank (Money Center) 13 0.81 6.81% 31.38% 39.98% 3.17% 26.43% 2.33% 68.62% 3.74% Banks (Regional) 676 0.53 5.20% 56.28% 37.41% 3.17% 20.66% 2.52% 43.72% 4.02% Beverage (Alcoholic) 22 1.06 8.24% 82.05% 55.14% 3.67% 8.54% 3.36% 17.95% 7.36% Beverage (Soft) 46 1.14 8.71% 81.27% 61.94% 3.67% 5.55% 3.47% 18.73% 7.73% Broadcasting 28 1.30 9.62% 58.46% 62.12% 3.67% 18.34% 3.00% 41.54% 6.87% Brokerage & Investment Banking 46 1.16 8.84% 24.78% 44.77% 3.17% 13.99% 2.73% 75.22% 4.24% Building Materials 39 1.12 8.59% 75.62% 43.52% 3.17% 17.45% 2.62% 24.38% 7.13% Business & Consumer Services 177 1.19 9.03% 76.68% 52.77% 3.67% 13.30% 3.18% 23.32% 7.67% Cable TV 18 0.91 7.42% 69.06% 52.83% 3.67% 21.18% 2.89% 30.94% 6.02% Chemical (Basic) 46 0.94 7.55% 71.27% 50.32% 3.67% 10.88% 3.27% 28.73% 6.32% Chemical (Diversified) 10 1.17 8.91% 75.08% 41.14% 3.17% 22.47% 2.46% 24.92% 7.30% Chemical (Specialty) 103 1.03 8.07% 82.40% 51.80% 3.67% 11.16% 3.26% 17.60% 7.22% Coal & Related Energy 42 1.64 11.61% 47.53% 74.62% 4.17% 0.99% 4.13% 52.47% 7.69% Computer Services 119 1.16 8.84% 78.39% 59.41% 3.67% 10.48% 3.29% 21.61% 7.64% Computers/Peripherals 64 1.21 9.13% 91.35% 66.35% 4.17% 7.35% 3.86% 8.65% 8.68% Construction Supplies 55 1.60 11.37% 68.78% 47.26% 3.17% 16.28% 2.65% 31.22% 8.65% Diversified 23 1.00 7.91% 62.16% 32.85% 3.17% 13.96% 2.73% 37.84% 5.95% Drugs (Biotechnology) 400 1.10 8.52% 92.18% 93.06% 5.17% 1.48% 5.09% 7.82% 8.25% Drugs (Pharmaceutical) 151 1.03 8.08% 88.17% 75.04% 4.17% 4.58% 3.98% 11.83% 7.59% Education 42 1.13 8.65% 71.72% 70.19% 4.17% 12.18% 3.66% 28.28% 7.24% Electrical Equipment 126 1.24 9.29% 85.57% 65.34% 4.17% 5.99% 3.92% 14.43% 8.51% Electronics (Consumer & Office) 28 1.37 10.06% 95.76% 56.16% 3.67% 4.50% 3.50% 4.24% 9.78% Electronics (General) 189 1.03 8.08% 87.19% 69.01% 4.17% 8.64% 3.81% 12.81% 7.53% Engineering/Construction 56 1.31 9.69% 78.55% 47.91% 3.17% 14.18% 2.72% 21.45% 8.19% Entertainment 84 1.21 9.10% 78.42% 58.48% 3.67% 4.11% 3.52% 21.58% 7.90% Environmental & Waste Services 103 1.28 9.56% 71.14% 65.61% 4.17% 6.31% 3.91% 28.86% 7.92% Farming/Agriculture 37 0.84 7.02% 62.32% 41.59% 3.17% 9.36% 2.87% 37.68% 5.46% Financial Svcs. (Non-bank & Insurance) 288 0.67 6.01% 7.65% 38.80% 3.17% 18.49% 2.58% 92.35% 2.85% Food Processing 96 0.99 7.88% 78.61% 42.05% 3.17% 13.70% 2.74% 21.39% 6.78% Food Wholesalers 14 1.41 10.29% 85.40% 35.73% 3.17% 13.47% 2.74% 14.60% 9.19% Furn/Home Furnishings 27 1.09 8.44% 78.98% 54.24% 3.67% 14.48% 3.14% 21.02% 7.32% Green & Renewable Energy 26 1.32 9.76% 47.63% 53.18% 3.67% 1.94% 3.60% 52.37% 6.53% Healthcare Products 261 0.99 7.86% 86.46% 64.48% 3.67% 6.73% 3.42% 13.54% 7.26% Healthcare Support Services 138 1.05 8.23% 78.95% 46.72% 3.17% 13.27% 2.75% 21.05% 7.08% Heathcare Information and Technology 127 0.95 7.63% 83.51% 70.49% 4.17% 6.35% 3.91% 16.49% 7.02% Homebuilding 35 1.29 9.57% 62.20% 53.78% 3.67% 18.11% 3.01% 37.80% 7.09% Hospitals/Healthcare Facilities 56 0.97 7.76% 56.95% 43.11% 3.17% 10.93% 2.82% 43.05% 5.64% Hotel/Gaming 80 1.18 8.96% 64.67% 49.55% 3.17% 11.41% 2.81% 35.33% 6.79%