FITB
Fifth Third Bancorp
Price:  
37.98 
USD
Volume:  
3,076,943.00
United States | Banks
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FITB WACC - Weighted Average Cost of Capital

The WACC of Fifth Third Bancorp (FITB) is 7.8%.

The Cost of Equity of Fifth Third Bancorp (FITB) is 10.65%.
The Cost of Debt of Fifth Third Bancorp (FITB) is 5.00%.

Range Selected
Cost of equity 9.30% - 12.00% 10.65%
Tax rate 20.80% - 21.00% 20.90%
Cost of debt 5.00% - 5.00% 5.00%
WACC 7.0% - 8.6% 7.8%
WACC

FITB WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.17 1.28
Additional risk adjustments 0.0% 0.5%
Cost of equity 9.30% 12.00%
Tax rate 20.80% 21.00%
Debt/Equity ratio 0.75 0.75
Cost of debt 5.00% 5.00%
After-tax WACC 7.0% 8.6%
Selected WACC 7.8%

FITB'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 FITB:

cost_of_equity (10.65%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.17) + 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.