EBC
Eastern Bankshares Inc
Price:  
15.30 
USD
Volume:  
1,351,002.00
United States | Banks
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EBC WACC - Weighted Average Cost of Capital

The WACC of Eastern Bankshares Inc (EBC) is 7.0%.

The Cost of Equity of Eastern Bankshares Inc (EBC) is 10.25%.
The Cost of Debt of Eastern Bankshares Inc (EBC) is 5.00%.

Range Selected
Cost of equity 8.90% - 11.60% 10.25%
Tax rate 22.80% - 28.70% 25.75%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.4% - 7.6% 7.0%
WACC

EBC WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.1 1.21
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.90% 11.60%
Tax rate 22.80% 28.70%
Debt/Equity ratio 1 1
Cost of debt 5.00% 5.00%
After-tax WACC 6.4% 7.6%
Selected WACC 7.0%

EBC'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 EBC:

cost_of_equity (10.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.1) + 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.