CYH WACC - Weighted Average Cost of Capital

The WACC of Community Health Systems Inc (CYH) is 8.8%.

The Cost of Equity of Community Health Systems Inc (CYH) is 41.90%.

The Cost of Debt of Community Health Systems Inc (CYH) is 11.20%.

	Range	Selected
Cost of equity	35.80% - 48.00%	41.90%
Tax rate	27.30% - 36.20%	31.75%
Cost of debt	6.80% - 15.60%	11.20%
WACC	6.2% - 11.5%	8.8%

WACC

CYH WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	6.93	7.71

Additional risk adjustments	0.0%	0.5%
Cost of equity	35.80%	48.00%

Tax rate	27.30%	36.20%
Debt/Equity ratio	24.49	24.49
Cost of debt	6.80%	15.60%

After-tax WACC	6.2%	11.5%


Selected WACC	8.8%

CYH'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 CYH:

cost_of_equity (41.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (6.93) + 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.