CNGO WACC - Weighted Average Cost of Capital

The WACC of Cengage Learning Holdings II Inc (CNGO) is 11.1%.

The Cost of Equity of Cengage Learning Holdings II Inc (CNGO) is 10.35%.

The Cost of Debt of Cengage Learning Holdings II Inc (CNGO) is 14.20%.

	Range	Selected
Cost of equity	9.00% - 11.70%	10.35%
Tax rate	14.20% - 17.30%	15.75%
Cost of debt	7.50% - 20.90%	14.20%
WACC	7.7% - 14.4%	11.1%

WACC

CNGO WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	1.11	1.22

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.00%	11.70%

Tax rate	14.20%	17.30%
Debt/Equity ratio	0.97	0.97
Cost of debt	7.50%	20.90%

After-tax WACC	7.7%	14.4%


Selected WACC	11.1%

CNGO'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 CNGO:

cost_of_equity (10.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.11) + 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.