ELY WACC - Weighted Average Cost of Capital

The WACC of Callaway Golf Co (ELY) is 12.0%.

The Cost of Equity of Callaway Golf Co (ELY) is 11.85%.

The Cost of Debt of Callaway Golf Co (ELY) is 15.25%.

	Range	Selected
Cost of equity	10.30% - 13.40%	11.85%
Tax rate	13.60% - 18.30%	15.95%
Cost of debt	8.30% - 22.20%	15.25%
WACC	9.6% - 14.5%	12.0%

WACC

ELY WACC calculation

Category	Low	High

Long-term bond rate	4.2%	4.7%
Equity market risk premium	4.2%	5.2%
Adjusted beta	1.44	1.56

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.30%	13.40%

Tax rate	13.60%	18.30%
Debt/Equity ratio	0.3	0.3
Cost of debt	8.30%	22.20%

After-tax WACC	9.6%	14.5%


Selected WACC	12.0%

ELY'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 ELY:

cost_of_equity (11.85%) = risk_free_rate (4.45%) + equity_risk_premium (4.70%) * adjusted_beta (1.44) + 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.