GTN WACC - Weighted Average Cost of Capital

The WACC of Gray Television Inc (GTN) is 8.1%.

The Cost of Equity of Gray Television Inc (GTN) is 7.40%.

The Cost of Debt of Gray Television Inc (GTN) is 10.90%.

	Range	Selected
Cost of equity	5.90% - 8.90%	7.40%
Tax rate	24.40% - 25.20%	24.80%
Cost of debt	6.20% - 15.60%	10.90%
WACC	4.8% - 11.5%	8.1%

WACC

GTN WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.44	0.72

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.90%	8.90%

Tax rate	24.40%	25.20%
Debt/Equity ratio	13.73	13.73
Cost of debt	6.20%	15.60%

After-tax WACC	4.8%	11.5%


Selected WACC	8.1%

GTN'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 GTN:

cost_of_equity (7.40%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.44) + 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.