US industry cost of capital
The industry-average discount rates that anchor every DCF valuation. Snapshot below is a curated 37-industry subset from Aswath Damodaran’s public dataset — the standard reference for cost of capital in practitioner and academic work. For the full ~90-industry table and global variants, follow the source link.
Reading the columns
- Beta — levered equity beta, measuring how the industry moves with the broader market.
- Cost of equity — CAPM cost of equity using Damodaran’s equity risk premium.
- Cost of debt — pre-tax cost of debt implied by the industry’s credit ratings.
- Debt ratio — market-value debt / (debt + equity).
- WACC — weighted-average cost of capital: (E/V × Cost of Equity) + (D/V × After-tax Cost of Debt).
Cost of capital by industry — US
| Industry | Firms | Beta | Cost of equity | Cost of debt | Debt ratio | WACC |
|---|---|---|---|---|---|---|
| Aerospace/Defense | 79 | 0.95 | 8.17% | 5.29% | 13.47% | 7.60% |
| Air Transport | 23 | 1.19 | 9.24% | 5.29% | 47.69% | 6.72% |
| Auto & Truck | 33 | 1.46 | 10.45% | 5.29% | 16.45% | 9.38% |
| Auto Parts | 35 | 1.34 | 9.92% | 5.29% | 29.31% | 8.18% |
| Banks (Regional) | 568 | 0.40 | 5.73% | 4.73% | 34.25% | 4.98% |
| Beverage (Soft) | 27 | 0.64 | 6.81% | 5.29% | 17.07% | 6.33% |
| Broadcasting | 24 | 0.47 | 6.05% | 5.29% | 46.19% | 5.09% |
| Brokerage & Investment Banking | 32 | 1.17 | 9.17% | 5.07% | 57.55% | 6.08% |
| Building Materials | 41 | 1.11 | 8.91% | 5.07% | 20.63% | 7.85% |
| Business & Consumer Services | 155 | 0.89 | 7.91% | 5.07% | 16.47% | 7.23% |
| Chemical (Specialty) | 59 | 0.97 | 8.28% | 5.07% | 23.01% | 7.25% |
| Computer Services | 64 | 1.09 | 8.80% | 5.29% | 20.06% | 7.83% |
| Drugs (Biotechnology) | 496 | 1.14 | 9.01% | 6.02% | 11.54% | 8.49% |
| Drugs (Pharmaceutical) | 228 | 0.98 | 8.33% | 6.02% | 12.69% | 7.85% |
| Electrical Equipment | 112 | 1.25 | 9.53% | 6.02% | 10.72% | 8.99% |
| Engineering/Construction | 48 | 1.21 | 9.35% | 5.29% | 12.29% | 8.69% |
| Environmental & Waste Services | 53 | 0.95 | 8.17% | 5.29% | 17.66% | 7.43% |
| Food Processing | 78 | 0.61 | 6.66% | 5.07% | 30.43% | 5.79% |
| Healthcare Products | 204 | 0.91 | 8.00% | 5.29% | 11.34% | 7.54% |
| Healthcare Support Services | 104 | 0.87 | 7.84% | 5.29% | 26.16% | 6.83% |
| Homebuilding | 30 | 0.91 | 8.01% | 5.07% | 17.59% | 7.27% |
| Hospitals/Healthcare Facilities | 31 | 0.80 | 7.52% | 5.29% | 37.47% | 6.19% |
| Hotel/Gaming | 63 | 1.08 | 8.77% | 5.07% | 28.44% | 7.36% |
| Insurance (Prop/Cas.) | 57 | 0.48 | 6.11% | 4.73% | 12.91% | 5.78% |
| Investments & Asset Management | 283 | 0.66 | 6.89% | 5.07% | 24.64% | 6.13% |
| Machinery | 105 | 0.96 | 8.25% | 5.29% | 12.81% | 7.70% |
| Oil/Gas (Prod. & Expl.) | 142 | 0.72 | 7.17% | 5.07% | 27.32% | 6.25% |
| Real Estate (Ops & Services) | 54 | 0.97 | 8.26% | 5.29% | 19.77% | 7.41% |
| Restaurant/Dining | 64 | 0.92 | 8.07% | 5.07% | 21.40% | 7.16% |
| Retail (Automotive) | 34 | 0.94 | 8.12% | 5.07% | 31.20% | 6.78% |
| Retail (Building Supply) | 14 | 1.54 | 10.80% | 5.29% | 18.89% | 9.51% |
| Retail (General) | 23 | 0.81 | 7.54% | 5.07% | 7.36% | 7.27% |
| Software (System & Application) | 309 | 1.28 | 9.64% | 5.29% | 5.28% | 9.34% |
| Telecom. Services | 39 | 0.63 | 6.75% | 5.29% | 49.00% | 5.39% |
| Transportation | 19 | 0.86 | 7.79% | 5.07% | 26.71% | 6.72% |
| Trucking | 26 | 1.01 | 8.46% | 5.07% | 20.15% | 7.52% |
| Utility (General) | 14 | 0.24 | 5.02% | 4.73% | 44.90% | 4.36% |
| US Market ex-Financials | 4,822 | 0.99 | 8.37% | 5.29% | 14.74% | 7.72% |
| Total US Market | 5,994 | 0.91 | 8.02% | 5.29% | 26.02% | 6.96% |
For the full universe (~90 industries) plus global and emerging-market variants, see the source at NYU Stern.
How this data gets used in an M&A deal
DCF anchor
Take the industry WACC as your starting discount rate; adjust up for size premium (private company + illiquidity), and up further for company-specific risk (customer concentration, key-person, regulatory).
Unlever & relever beta
For a private-company DCF, take the industry unlevered beta, relever at the target’s expected post-close capital structure, then compute cost of equity via CAPM. Damodaran publishes the unlevered beta and D/E ratio separately.
Sanity-check comps
If a comparable-company multiple implies a discount rate wildly off the industry WACC, that’s a signal to re-examine the comp set or the growth assumptions.
Investment committee
Buy-side IC memos benchmark the deal’s hurdle rate against the relevant industry WACC. Sponsors typically add 800–1,500 bps over WACC as their targeted equity IRR.
Sources & data provenance
Data on this page reflects the state of primary sources as of .
Damodaran's "Data for current year" pages are the standard public reference for industry-level cost of capital. The dataset is updated once per year, in the first two weeks of January.
Historical annual snapshots of the full dataset, going back to 1998.