HPQ
HP Inc
Price:  
28.65 
USD
Volume:  
7,214,579
United States | Technology Hardware, Storage & Peripherals

HPQ WACC - Weighted Average Cost of Capital

The WACC of HP Inc (HPQ) is 8.9%.

The Cost of Equity of HP Inc (HPQ) is 10.85%.
The Cost of Debt of HP Inc (HPQ) is 4.65%.

RangeSelected
Cost of equity9.4% - 12.3%10.85%
Tax rate12.8% - 14.2%13.5%
Cost of debt4.5% - 4.8%4.65%
WACC7.8% - 10.0%8.9%
WACC

HPQ WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta1.21.33
Additional risk adjustments0.0%0.5%
Cost of equity9.4%12.3%
Tax rate12.8%14.2%
Debt/Equity ratio
0.390.39
Cost of debt4.5%4.8%
After-tax WACC7.8%10.0%
Selected WACC8.9%

HPQ'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 HPQ:

cost_of_equity (10.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.2) + 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.