CHCO
City Holding Co
Price:  
118.80 
USD
Volume:  
51,006.00
United States | Banks
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CHCO WACC - Weighted Average Cost of Capital

The WACC of City Holding Co (CHCO) is 8.1%.

The Cost of Equity of City Holding Co (CHCO) is 8.90%.
The Cost of Debt of City Holding Co (CHCO) is 5.00%.

Range Selected
Cost of equity 7.80% - 10.00% 8.90%
Tax rate 19.70% - 20.00% 19.85%
Cost of debt 5.00% - 5.00% 5.00%
WACC 7.2% - 9.0% 8.1%
WACC

CHCO WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.85 0.91
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.80% 10.00%
Tax rate 19.70% 20.00%
Debt/Equity ratio 0.19 0.19
Cost of debt 5.00% 5.00%
After-tax WACC 7.2% 9.0%
Selected WACC 8.1%

CHCO'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 CHCO:

cost_of_equity (8.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.85) + 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.