GS
Goldman Sachs Group Inc
Price:  
608.44 
USD
Volume:  
1,996,247
United States | Capital Markets

GS WACC - Weighted Average Cost of Capital

The WACC of Goldman Sachs Group Inc (GS) is 11.2%.

The Cost of Equity of Goldman Sachs Group Inc (GS) is 11.8%.
The Cost of Debt of Goldman Sachs Group Inc (GS) is 14.05%.

RangeSelected
Cost of equity9.3% - 14.3%11.8%
Tax rate20.4% - 21.4%20.9%
Cost of debt4.2% - 23.9%14.05%
WACC4.2% - 18.1%11.2%
WACC

GS WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta1.181.68
Additional risk adjustments0.0%0.5%
Cost of equity9.3%14.3%
Tax rate20.4%21.4%
Debt/Equity ratio
5.935.93
Cost of debt4.2%23.9%
After-tax WACC4.2%18.1%
Selected WACC11.2%

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.