COF
Capital One Financial Corp
Price:  
220.91 
USD
Volume:  
1,856,037.00
United States | Consumer Finance
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COF WACC - Weighted Average Cost of Capital

The WACC of Capital One Financial Corp (COF) is 7.5%.

The Cost of Equity of Capital One Financial Corp (COF) is 8.60%.
The Cost of Debt of Capital One Financial Corp (COF) is 5.00%.

Range Selected
Cost of equity 7.30% - 9.90% 8.60%
Tax rate 19.50% - 19.90% 19.70%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.5% - 8.5% 7.5%
WACC

COF WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.74 0.9
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.30% 9.90%
Tax rate 19.50% 19.90%
Debt/Equity ratio 0.32 0.32
Cost of debt 5.00% 5.00%
After-tax WACC 6.5% 8.5%
Selected WACC 7.5%

COF'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 COF:

cost_of_equity (8.60%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.74) + 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.