Cost of Capital by Sector

Data Used: Value Line database, of 5928 firms

Date of Analysis: Data used is as of January 2011

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 Stock Cost of Debt Tax Rate After-tax Cost of Debt D/(D+E) Cost of Capital

Advertising 28 1.79 12.26% 73.23% 97.15% 6.29% 12.86% 5.48% 26.77% 10.45%

Aerospace/Defense 63 1.15 9.04% 80.88% 63.51% 4.79% 21.10% 3.78% 19.12% 8.03%

Air Transport 40 1.21 9.32% 65.51% 69.26% 5.29% 22.30% 4.11% 34.49% 7.52%

Apparel 48 1.35 10.05% 86.36% 77.62% 5.29% 20.86% 4.19% 13.64% 9.25%

Auto Parts 47 1.78 12.17% 80.21% 85.62% 5.79% 13.45% 5.01% 19.79% 10.75%

Automotive 19 1.50 10.79% 47.94% 56.57% 4.79% 20.43% 3.81% 52.06% 7.15%

Bank 418 0.75 7.02% 53.80% 58.22% 4.79% 13.89% 4.12% 46.20% 5.68%

Bank (Canadian) 7 0.86 7.61% 87.90% 28.97% 4.29% 20.27% 3.42% 12.10% 7.10%

Bank (Midwest) 40 0.96 8.09% 59.16% 49.99% 4.29% 18.02% 3.52% 40.84% 6.22%

Beverage 34 0.92 7.87% 88.43% 73.62% 5.29% 19.08% 4.28% 11.57% 7.45%

Biotechnology 120 1.13 8.96% 88.31% 98.40% 6.29% 5.74% 5.93% 11.69% 8.61%

Building Materials 47 1.33 9.94% 58.35% 83.71% 5.79% 11.69% 5.11% 41.65% 7.93%

Cable TV 24 1.43 10.44% 59.38% 54.86% 4.79% 22.98% 3.69% 40.62% 7.70%

Canadian Energy 10 1.14 8.98% 77.86% 36.68% 4.29% 10.36% 3.85% 22.14% 7.85%

Chemical (Basic) 17 1.28 9.71% 84.21% 53.72% 4.79% 22.39% 3.72% 15.79% 8.77%

Chemical (Diversified) 31 1.51 10.85% 82.60% 72.83% 5.29% 23.87% 4.03% 17.40% 9.66%

Chemical (Specialty) 83 1.37 10.14% 81.26% 78.35% 5.29% 14.85% 4.50% 18.74% 9.08%

Coal 25 1.59 11.24% 86.09% 68.06% 5.29% 13.17% 4.59% 13.91% 10.31%

Computer Software/Svcs 247 1.06 8.58% 95.53% 82.47% 5.79% 13.88% 4.99% 4.47% 8.42%

Computers/Peripherals 101 1.27 9.66% 91.63% 104.65% 7.29% 8.94% 6.64% 8.37% 9.41%

Diversified Co. 111 1.22 9.38% 50.06% 69.50% 5.29% 17.14% 4.38% 49.94% 6.89%

Drug 301 1.11 8.84% 87.64% 103.61% 7.29% 6.72% 6.80% 12.36% 8.59%

E-Commerce 52 1.14 8.98% 95.62% 65.85% 5.29% 17.19% 4.38% 4.38% 8.78%

Educational Services 37 0.79 7.26% 91.84% 72.23% 5.29% 27.32% 3.84% 8.16% 6.98%

Electric Util. (Central) 23 0.78 7.19% 50.80% 31.21% 4.29% 25.40% 3.20% 49.20% 5.23%

Electric Utility (East) 25 0.73 6.93% 57.23% 27.40% 4.29% 30.56% 2.98% 42.77% 5.24%

Electric Utility (West) 14 0.75 7.02% 54.59% 25.12% 4.29% 31.47% 2.94% 45.41% 5.17%

Electrical Equipment 79 1.32 9.88% 90.17% 75.96% 5.29% 15.54% 4.47% 9.83% 9.35%

Electronics 158 1.13 8.93% 84.46% 89.78% 5.79% 12.85% 5.05% 15.54% 8.32%

Engineering & Const 17 1.65 11.55% 92.65% 75.32% 5.29% 28.52% 3.78% 7.35% 10.98%

Entertainment 75 1.72 11.88% 72.47% 91.19% 6.29% 14.68% 5.37% 27.53% 10.09%

Entertainment Tech 31 1.39 10.23% 92.76% 93.17% 6.29% 7.49% 5.82% 7.24% 9.91%

Environmental 69 0.85 7.54% 70.86% 95.81% 6.29% 11.02% 5.60% 29.14% 6.97%

Financial Svcs. (Div.) 230 1.37 10.15% 42.40% 81.52% 5.79% 18.63% 4.71% 57.60% 7.02%

Food Processing 109 0.87 7.63% 77.53% 58.43% 4.79% 21.80% 3.75% 22.47% 6.76%

Foreign Electronics 9 1.14 8.98% 77.19% 39.08% 4.29% 30.06% 3.00% 22.81% 7.61%

Funeral Services 5 1.22 9.40% 66.32% 41.91% 4.29% 29.02% 3.05% 33.68% 7.26%

Furn/Home Furnishings 30 1.67 11.63% 79.25% 73.60% 5.29% 16.87% 4.40% 20.75% 10.13%

Healthcare Information 26 0.94 8.00% 95.36% 65.23% 5.29% 22.42% 4.10% 4.64% 7.82%

Heavy Truck/Equip Makers 8 1.94 13.00% 68.30% 86.20% 5.79% 19.97% 4.63% 31.70% 10.35%

Homebuilding 24 1.39 10.24% 52.90% 78.72% 5.29% 6.07% 4.97% 47.10% 7.76%

Hotel/Gaming 52 1.76 12.09% 67.08% 88.25% 5.79% 15.93% 4.87% 32.92% 9.71%

Household Products 22 1.17 9.13% 84.47% 50.80% 4.79% 27.46% 3.47% 15.53% 8.25%

Human Resources 24 1.44 10.51% 91.62% 72.08% 5.29% 23.73% 4.03% 8.38% 9.96%

Industrial Services 137 0.96 8.08% 79.20% 68.67% 5.29% 20.50% 4.21% 20.80% 7.28%

Information Services 26 1.10 8.78% 83.19% 49.65% 4.29% 22.44% 3.33% 16.81% 7.86%

Insurance (Life) 31 1.39 10.22% 84.54% 68.87% 5.29% 20.29% 4.22% 15.46% 9.29%

Insurance (Prop/Cas.) 67 0.92 7.90% 89.99% 40.46% 4.29% 19.50% 3.45% 10.01% 7.46%

Internet 180 1.11 8.82% 98.46% 111.24% 7.29% 7.89% 6.71% 1.54% 8.79%

Machinery 114 1.22 9.37% 77.81% 68.30% 5.29% 19.61% 4.25% 22.19% 8.23%

Maritime 53 1.37 10.14% 41.89% 66.65% 5.29% 6.54% 4.94% 58.11% 7.12%
Maritime 53 1.37 10.14% 41.89% 66.65% 5.29% 6.54% 4.94% 58.11% 7.12%

Medical Services 139 0.88 7.70% 72.10% 85.75% 5.79% 20.56% 4.60% 27.90% 6.84%

Medical Supplies 231 1.02 8.40% 89.71% 80.03% 5.79% 13.12% 5.03% 10.29% 8.05%

Metal Fabricating 30 1.44 10.50% 84.58% 68.64% 5.29% 22.51% 4.10% 15.42% 9.51%

Metals & Mining (Div.) 69 1.33 9.93% 90.08% 107.77% 7.29% 7.07% 6.77% 9.92% 9.62%

Natural Gas (Div.) 32 1.25 9.56% 74.09% 55.80% 4.79% 15.07% 4.07% 25.91% 8.14%

Natural Gas Utility 27 0.65 6.52% 61.71% 28.01% 4.29% 23.93% 3.26% 38.29% 5.27%

Newspaper 13 1.71 11.84% 68.12% 86.68% 5.79% 29.44% 4.09% 31.88% 9.37%

Office Equip/Supplies 24 1.45 10.55% 68.91% 67.02% 5.29% 14.81% 4.51% 31.09% 8.67%

Oil/Gas Distribution 12 0.97 8.15% 57.04% 75.84% 5.29% 15.06% 4.49% 42.96% 6.58%

Oilfield Svcs/Equip. 95 1.48 10.70% 84.08% 61.68% 4.79% 16.42% 4.00% 15.92% 9.63%

Packaging & Container 27 1.06 8.59% 69.20% 59.19% 4.79% 20.44% 3.81% 30.80% 7.12%

Paper/Forest Products 37 1.52 10.88% 58.39% 94.44% 6.29% 15.23% 5.33% 41.61% 8.57%

Petroleum (Integrated) 23 1.21 9.34% 84.48% 45.93% 4.29% 27.13% 3.13% 15.52% 8.38%

Petroleum (Producing) 163 1.36 10.11% 81.65% 90.21% 6.29% 8.47% 5.76% 18.35% 9.31%

Pharmacy Services 19 0.96 8.11% 83.07% 67.06% 5.29% 25.09% 3.96% 16.93% 7.40%

Pipeline MLPs 11 0.85 7.56% 70.33% 27.93% 4.29% 3.03% 4.16% 29.67% 6.55%

Power 68 1.34 9.99% 50.29% 92.21% 6.29% 7.58% 5.81% 49.71% 7.91%

Precious Metals 74 1.18 9.21% 93.67% 90.67% 6.29% 9.47% 5.69% 6.33% 8.99%

Precision Instrument 83 1.27 9.65% 89.93% 66.72% 5.29% 12.02% 4.65% 10.07% 9.15%

Property Management 27 1.20 9.30% 40.98% 73.17% 5.29% 15.63% 4.46% 59.02% 6.45%

Public/Private Equity 8 2.18 14.19% 48.92% 88.43% 5.79% 0.43% 5.76% 51.08% 9.89%

Publishing 23 1.30 9.81% 63.34% 64.10% 4.79% 25.44% 3.57% 36.66% 7.52%

R.E.I.T. 6 1.29 9.73% 76.42% 50.28% 4.79% 10.21% 4.30% 23.58% 8.45%

Railroad 14 1.28 9.71% 78.62% 44.23% 4.29% 26.02% 3.17% 21.38% 8.31%

Recreation 52 1.50 10.79% 72.88% 85.00% 5.79% 17.23% 4.79% 27.12% 9.16%

Reinsurance 8 0.98 8.17% 86.75% 35.05% 4.29% 15.18% 3.64% 13.25% 7.57%

Restaurant 60 1.33 9.92% 86.14% 66.29% 5.29% 22.08% 4.12% 13.86% 9.12%

Retail (Special Lines) 143 1.54 10.97% 85.35% 89.31% 5.79% 19.64% 4.65% 14.65% 10.05%

Retail Automotive 15 1.44 10.48% 78.42% 55.42% 4.79% 32.05% 3.25% 21.58% 8.92%

Retail Building Supply 8 0.92 7.88% 88.02% 41.16% 4.29% 26.31% 3.16% 11.98% 7.31%

Retail Store 38 1.33 9.96% 79.86% 63.21% 4.79% 25.96% 3.55% 20.14% 8.67%

Retail/Wholesale Food 29 0.74 7.01% 70.37% 41.92% 4.29% 34.50% 2.81% 29.63% 5.77%

Securities Brokerage 25 1.25 9.53% 40.03% 54.63% 4.79% 26.95% 3.50% 59.97% 5.91%

Semiconductor 115 1.56 11.08% 94.13% 76.21% 5.29% 7.93% 4.87% 5.87% 10.72%

Semiconductor Equip 14 1.79 12.24% 94.48% 70.30% 5.29% 5.72% 4.99% 5.52% 11.84%

Shoe 18 1.31 9.86% 98.32% 57.70% 4.79% 24.51% 3.62% 1.68% 9.76%

Steel (General) 19 1.59 11.24% 80.99% 59.21% 4.79% 12.88% 4.17% 19.01% 9.90%

Steel (Integrated) 13 1.72 11.89% 73.08% 67.30% 5.29% 16.43% 4.42% 26.92% 9.88%

Telecom. Equipment 104 1.04 8.51% 90.32% 85.38% 5.79% 12.42% 5.07% 9.68% 8.18%

Telecom. Services 85 1.01 8.36% 74.59% 79.21% 5.29% 14.27% 4.54% 25.41% 7.39%

Telecom. Utility 28 1.03 8.43% 54.33% 60.33% 4.79% 24.23% 3.63% 45.67% 6.24%

Thrift 181 0.70 6.79% 92.75% 52.51% 4.79% 14.44% 4.10% 7.25% 6.59%

Tobacco 13 0.73 6.96% 82.26% 80.27% 5.79% 22.47% 4.49% 17.74% 6.52%

Toiletries/Cosmetics 15 1.27 9.64% 83.67% 63.65% 4.79% 21.52% 3.76% 16.33% 8.68%

Trucking 33 1.20 9.28% 70.35% 65.00% 5.29% 25.48% 3.94% 29.65% 7.70%

Utility (Foreign) 5 0.99 8.23% 63.02% 34.61% 4.29% 20.30% 3.42% 36.98% 6.45%

Water Utility 12 0.70 6.79% 56.22% 20.74% 3.79% 35.46% 2.45% 43.78% 4.89%

Wireless Networking 48 1.25 9.56% 84.61% 75.06% 5.29% 12.68% 4.62% 15.39% 8.80%

Total Market Total Market 59285928 1.151.15 9.02%9.02% 73.51%73.51% 75.65%75.65% 5.29%5.29% 15.32%15.32% 4.48%4.48% 26.49%26.49% 7.82%7.82%

Last Updated in January 2011

By Aswath Damodaran