GS WACC - Weighted Average Cost of Capital
The WACC of Goldman Sachs Group Inc (GS) is 11.2%.
| Range | Selected | |
| Cost of equity | 9.3% - 14.3% | 11.8% |
| Tax rate | 20.4% - 21.4% | 20.9% |
| Cost of debt | 4.2% - 23.9% | 14.05% |
| WACC | 4.2% - 18.1% | 11.2% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.18 | 1.68 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.3% | 14.3% |
| Tax rate | 20.4% | 21.4% |
| Debt/Equity ratio | 5.93 | 5.93 |
| Cost of debt | 4.2% | 23.9% |
| After-tax WACC | 4.2% | 18.1% |
| Selected WACC | 11.2% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| GS | Goldman Sachs Group Inc | 5.93 | 1.43 | 0.25 |
| LPLA | LPL Financial Holdings Inc | 0.19 | 1.52 | 1.32 |
| MS | Morgan Stanley | 3.71 | 1.53 | 0.39 |
| RCG.TO | RF Capital Group Inc | 1.32 | 0.19 | 0.1 |
| RILY | B. Riley Financial Inc | 58.16 | -0.06 | 0 |
| RJF | Raymond James Financial Inc | 2.03 | 1.23 | 0.47 |
| SCHW | Charles Schwab Corp | 1.92 | 1.12 | 0.44 |
| SNEX | Stonex Group Inc | 2.69 | 1.03 | 0.33 |
| SRL | Scully Royalty Ltd | 0.33 | 0.22 | 0.18 |
| VIRT | Virtu Financial Inc | 1.9 | 0.42 | 0.17 |
| Low | High | |
| Unlevered beta | 0.22 | 0.35 |
| Relevered beta | 1.27 | 2.01 |
| Adjusted relevered beta | 1.18 | 1.68 |
GS'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 GS:
cost_of_equity (11.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.18) + 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.