GM WACC - Weighted Average Cost of Capital

The WACC of General Motors Co (GM) is 7.4%.

The Cost of Equity of General Motors Co (GM) is 9.35%.

The Cost of Debt of General Motors Co (GM) is 8.25%.

	Range	Selected
Cost of equity	6.90% - 11.80%	9.35%
Tax rate	19.60% - 21.80%	20.70%
Cost of debt	4.10% - 12.40%	8.25%
WACC	4.5% - 10.4%	7.4%

WACC

GM WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.67	1.23

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.90%	11.80%

Tax rate	19.60%	21.80%
Debt/Equity ratio	1.97	1.97
Cost of debt	4.10%	12.40%

After-tax WACC	4.5%	10.4%


Selected WACC	7.4%

GM'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 GM:

cost_of_equity (9.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.67) + 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.