HLI
Houlihan Lokey Inc
Price:  
166.51 
USD
Volume:  
515,323.00
United States | Capital Markets
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HLI WACC - Weighted Average Cost of Capital

The WACC of Houlihan Lokey Inc (HLI) is 7.0%.

The Cost of Equity of Houlihan Lokey Inc (HLI) is 7.05%.
The Cost of Debt of Houlihan Lokey Inc (HLI) is 7.00%.

Range Selected
Cost of equity 5.90% - 8.20% 7.05%
Tax rate 23.00% - 25.10% 24.05%
Cost of debt 4.50% - 9.50% 7.00%
WACC 5.9% - 8.2% 7.0%
WACC

HLI 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 0.59
Additional risk adjustments 0.0% 0.5%
Cost of equity 5.90% 8.20%
Tax rate 23.00% 25.10%
Debt/Equity ratio 0 0
Cost of debt 4.50% 9.50%
After-tax WACC 5.9% 8.2%
Selected WACC 7.0%

HLI'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 HLI:

cost_of_equity (7.05%) = 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.