CASS WACC - Weighted Average Cost of Capital

The WACC of Cass Information Systems Inc (CASS) is 10.4%.

The Cost of Equity of Cass Information Systems Inc (CASS) is 13.90%.

The Cost of Debt of Cass Information Systems Inc (CASS) is 9.80%.

	Range	Selected
Cost of equity	11.50% - 16.30%	13.90%
Tax rate	18.10% - 19.00%	18.55%
Cost of debt	4.00% - 15.60%	9.80%
WACC	6.6% - 14.1%	10.4%

WACC

CASS WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	1.66	2.04

Additional risk adjustments	0.0%	0.5%
Cost of equity	11.50%	16.30%

Tax rate	18.10%	19.00%
Debt/Equity ratio	1.46	1.46
Cost of debt	4.00%	15.60%

After-tax WACC	6.6%	14.1%


Selected WACC	10.4%

CASS'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 CASS:

cost_of_equity (13.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.66) + 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.