HGV
Hilton Grand Vacations Inc
Price:  
39.16 
USD
Volume:  
736,091.00
United States | Hotels, Restaurants & Leisure
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HGV WACC - Weighted Average Cost of Capital

The WACC of Hilton Grand Vacations Inc (HGV) is 6.2%.

The Cost of Equity of Hilton Grand Vacations Inc (HGV) is 8.60%.
The Cost of Debt of Hilton Grand Vacations Inc (HGV) is 7.10%.

Range Selected
Cost of equity 6.90% - 10.30% 8.60%
Tax rate 29.50% - 32.00% 30.75%
Cost of debt 5.10% - 9.10% 7.10%
WACC 4.7% - 7.6% 6.2%
WACC

HGV WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.66 0.97
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.90% 10.30%
Tax rate 29.50% 32.00%
Debt/Equity ratio 1.88 1.88
Cost of debt 5.10% 9.10%
After-tax WACC 4.7% 7.6%
Selected WACC 6.2%

HGV'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 HGV:

cost_of_equity (8.60%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.66) + 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.