GOGO
Gogo Inc
Price:  
12.56 
USD
Volume:  
1,469,539.00
United States | Wireless Telecommunication Services
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GOGO WACC - Weighted Average Cost of Capital

The WACC of Gogo Inc (GOGO) is 7.9%.

The Cost of Equity of Gogo Inc (GOGO) is 6.85%.
The Cost of Debt of Gogo Inc (GOGO) is 14.25%.

Range Selected
Cost of equity 5.70% - 8.00% 6.85%
Tax rate 19.70% - 34.20% 26.95%
Cost of debt 7.60% - 20.90% 14.25%
WACC 5.8% - 9.9% 7.9%
WACC

GOGO WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.39 0.57
Additional risk adjustments 0.0% 0.5%
Cost of equity 5.70% 8.00%
Tax rate 19.70% 34.20%
Debt/Equity ratio 0.5 0.5
Cost of debt 7.60% 20.90%
After-tax WACC 5.8% 9.9%
Selected WACC 7.9%

GOGO'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 GOGO:

cost_of_equity (6.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.39) + 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.