CYH WACC - Weighted Average Cost of Capital

The WACC of Community Health Systems Inc (CYH) is 6.5%.

The Cost of Equity of Community Health Systems Inc (CYH) is 28.80%.

The Cost of Debt of Community Health Systems Inc (CYH) is 9.50%.

	Range	Selected
Cost of equity	24.50% - 33.10%	28.80%
Tax rate	37.50% - 45.80%	41.65%
Cost of debt	6.60% - 12.40%	9.50%
WACC	5.1% - 7.9%	6.5%

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	4.49	5.05

Additional risk adjustments	0.0%	0.5%
Cost of equity	24.50%	33.10%

Tax rate	37.50%	45.80%
Debt/Equity ratio	21.06	21.06
Cost of debt	6.60%	12.40%

After-tax WACC	5.1%	7.9%


Selected WACC	6.5%

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 (28.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (4.49) + 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.