DG
Dollar General Corp
Price:  
90.30 
USD
Volume:  
3,769,900.00
United States | Multiline Retail
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DG WACC - Weighted Average Cost of Capital

The WACC of Dollar General Corp (DG) is 6.8%.

The Cost of Equity of Dollar General Corp (DG) is 7.55%.
The Cost of Debt of Dollar General Corp (DG) is 5.80%.

Range Selected
Cost of equity 6.40% - 8.70% 7.55%
Tax rate 21.80% - 21.90% 21.85%
Cost of debt 4.60% - 7.00% 5.80%
WACC 5.7% - 7.9% 6.8%
WACC

DG WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.55 0.68
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.40% 8.70%
Tax rate 21.80% 21.90%
Debt/Equity ratio 0.31 0.31
Cost of debt 4.60% 7.00%
After-tax WACC 5.7% 7.9%
Selected WACC 6.8%

DG'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 DG:

cost_of_equity (7.55%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.55) + 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.