HOG
Harley-Davidson Inc
Price:  
24.39 
USD
Volume:  
1,408,007.00
United States | Automobiles
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HOG WACC - Weighted Average Cost of Capital

The WACC of Harley-Davidson Inc (HOG) is 9.5%.

The Cost of Equity of Harley-Davidson Inc (HOG) is 13.55%.
The Cost of Debt of Harley-Davidson Inc (HOG) is 9.80%.

Range Selected
Cost of equity 9.70% - 17.40% 13.55%
Tax rate 20.30% - 20.60% 20.45%
Cost of debt 4.00% - 15.60% 9.80%
WACC 5.1% - 13.9% 9.5%
WACC

HOG WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.26 2.24
Additional risk adjustments 0.0% 0.5%
Cost of equity 9.70% 17.40%
Tax rate 20.30% 20.60%
Debt/Equity ratio 2.32 2.32
Cost of debt 4.00% 15.60%
After-tax WACC 5.1% 13.9%
Selected WACC 9.5%

HOG'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 HOG:

cost_of_equity (13.55%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.26) + 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.