GM WACC - Weighted Average Cost of Capital

The WACC of General Motors Co (GM) is 6.2%.

The Cost of Equity of General Motors Co (GM) is 8.90%.

The Cost of Debt of General Motors Co (GM) is 6.60%.

	Range	Selected
Cost of equity	6.90% - 10.90%	8.90%
Tax rate	19.60% - 21.80%	20.70%
Cost of debt	4.10% - 9.10%	6.60%
WACC	4.3% - 8.2%	6.2%

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	0.66	1.07

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.90%	10.90%

Tax rate	19.60%	21.80%
Debt/Equity ratio	2.57	2.57
Cost of debt	4.10%	9.10%

After-tax WACC	4.3%	8.2%


Selected WACC	6.2%

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 (8.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.66) + 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.