CACC
Credit Acceptance Corp
Price:  
488.58 
USD
Volume:  
174,126.00
United States | Consumer Finance
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CACC WACC - Weighted Average Cost of Capital

The WACC of Credit Acceptance Corp (CACC) is 6.8%.

The Cost of Equity of Credit Acceptance Corp (CACC) is 8.50%.
The Cost of Debt of Credit Acceptance Corp (CACC) is 7.00%.

Range Selected
Cost of equity 6.80% - 10.20% 8.50%
Tax rate 23.80% - 24.30% 24.05%
Cost of debt 4.90% - 9.10% 7.00%
WACC 5.2% - 8.5% 6.8%
WACC

CACC WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.63 0.95
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.80% 10.20%
Tax rate 23.80% 24.30%
Debt/Equity ratio 1.11 1.11
Cost of debt 4.90% 9.10%
After-tax WACC 5.2% 8.5%
Selected WACC 6.8%

CACC'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 CACC:

cost_of_equity (8.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.63) + 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.