DLHC WACC - Weighted Average Cost of Capital

The WACC of DLH Holdings Corp (DLHC) is 10.3%.

The Cost of Equity of DLH Holdings Corp (DLHC) is 7.45%.

The Cost of Debt of DLH Holdings Corp (DLHC) is 15.35%.

	Range	Selected
Cost of equity	5.40% - 9.50%	7.45%
Tax rate	24.80% - 26.60%	25.70%
Cost of debt	9.10% - 21.60%	15.35%
WACC	6.4% - 14.1%	10.3%

WACC

DLHC WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.32	0.83

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.40%	9.50%

Tax rate	24.80%	26.60%
Debt/Equity ratio	2.65	2.65
Cost of debt	9.10%	21.60%

After-tax WACC	6.4%	14.1%


Selected WACC	10.3%

DLHC'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 DLHC:

cost_of_equity (7.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.32) + 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.