For the purpose of this discussion post, I have chosen Apple Inc and
it operates in the Consumer Electronics industry. According to Guru
Focus, the weighted average cost of capital (WACC) for Apple Inc. is
10.64%. Apple Inc has a return on invested capital percentage of
33.18%. Apple can acquire capital for investments at a low cost and
generate a higher return on the investment. Apple Inc has a volatile
stock price causing their WACC to be high because of the investment
risk associated with the company.
There are several factors that can impact the WACC for Apple Inc.
The main factor that I see that could impact the WACC is the market
conditions. According to Mukherjee (2022) during the COVID
pandemic, smartphones and PCs were in high demand causing
inflation and high energy and fuel costs. Furthermore, post pandemic,
the demand for these consumable electronics has dropped. The chip
shortage should get better with less demand for consumable
electronics.
Citations:
Mukherjee, S. (2022, July 27). Gartner forecasts chip sales growth to
slow down in 2022, fall next year. Reuters.
https://www.reuters.com/business/gartner-forecasts-chip-sales-
growth-slow-down-2022-fall-next-year-2022-07-27/
Dart, J. (2022, August 25). Supply Chain Risks: Inflation Now Troubles
the Industry. Velocity Electronics.
https://velocityelectronics.com/2022/08/25/supply-chain-risks-
inflation-now-troubles-the-industry/
Weighted Average Cost of Capital (WACC) Explained with Formula and
Example. (n.d.). Investopedia.
https://www.investopedia.com/terms/w/wacc.asp#:~:text=What%2
0Is%20Weighted%20Average%20Cost
Apple (AAPL) WACC %. (n.d.). Www.gurufocus.com. Retrieved
December 9, 2022, from
https://www.gurufocus.com/term/wacc/AAPL/WACC-
Percentage/Apple#:~:text=As%20of%20today%20(2022%2D12
