GSKY
GreenSky Inc
Price:  
10.20 
USD
Volume:  
3,798,880.00
United States | IT Services
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GSKY WACC - Weighted Average Cost of Capital

The WACC of GreenSky Inc (GSKY) is 8.0%.

The Cost of Equity of GreenSky Inc (GSKY) is 8.75%.
The Cost of Debt of GreenSky Inc (GSKY) is 5.40%.

Range Selected
Cost of equity 7.50% - 10.00% 8.75%
Tax rate 4.80% - 6.40% 5.60%
Cost of debt 4.90% - 5.90% 5.40%
WACC 6.9% - 9.1% 8.0%
WACC

GSKY WACC calculation

Category Low High
Long-term bond rate 3.2% 3.7%
Equity market risk premium 4.2% 5.2%
Adjusted beta 1.02 1.11
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.50% 10.00%
Tax rate 4.80% 6.40%
Debt/Equity ratio 0.24 0.24
Cost of debt 4.90% 5.90%
After-tax WACC 6.9% 9.1%
Selected WACC 8.0%

GSKY'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 GSKY:

cost_of_equity (8.75%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (1.02) + 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.