AAR Corp (AIR) WACC Analysis

As of May 23, 2025, AAR Corp (AIR) carries a Weighted Average Cost of Capital (WACC) of 8.3%. WACC reflects the blended rate AAR Corp must pay to both equity and debt holders.

Within that, the cost of equity is 8.6%, the cost of debt is 6.1%, and the effective tax rate is 23.4%.

Breakdown of WACC Components

• Long-term bond rate: 3.9% – 4.4%
• Equity market risk premium: 4.6% – 5.6%
• Adjusted beta: 1.02 – 1.14
• Additional risk adjustment: 0.0% – 0.5%
• Debt-to-equity ratio: 0.44

What It Means for Investors

With a selected WACC of 8.3%, AAR Corp must ensure any new investment returns exceed this threshold to generate shareholder value. This level reflects a moderate financing cost structure.