C
Citigroup Inc
Price:  
71.64 
USD
Volume:  
12,693,378.00
United States | Banks
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Citi WACC - Weighted Average Cost of Capital

The WACC of Citigroup Inc (C) is 5.3%.

The Cost of Equity of Citigroup Inc (C) is 11.30%.
The Cost of Debt of Citigroup Inc (C) is 5.00%.

Range Selected
Cost of equity 9.50% - 13.10% 11.30%
Tax rate 19.70% - 21.80% 20.75%
Cost of debt 5.00% - 5.00% 5.00%
WACC 5.0% - 5.6% 5.3%
WACC

Citi WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.23 1.46
Additional risk adjustments 0.0% 0.5%
Cost of equity 9.50% 13.10%
Tax rate 19.70% 21.80%
Debt/Equity ratio 4.34 4.34
Cost of debt 5.00% 5.00%
After-tax WACC 5.0% 5.6%
Selected WACC 5.3%

Citi's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for Citi:

cost_of_equity (11.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.23) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.