The WACC of Gohealth Inc (GOCO) is 17.8%.
| Range | Selected | |
| Cost of equity | 17.40% - 31.70% | 24.55% |
| Tax rate | 0.10% - 0.10% | 0.10% |
| Cost of debt | 9.90% - 23.90% | 16.90% |
| WACC | 10.8% - 24.8% | 17.8% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 2.94 | 4.8 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 17.40% | 31.70% |
| Tax rate | 0.10% | 0.10% |
| Debt/Equity ratio | 7.53 | 7.53 |
| Cost of debt | 9.90% | 23.90% |
| After-tax WACC | 10.8% | 24.8% |
| Selected WACC | 17.8% | |
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 Gohealth:
cost_of_equity (24.55%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (2.94) + 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.