HPQ
HP Inc
Price:  
26.33 
USD
Volume:  
5,941,675.00
United States | Technology Hardware, Storage & Peripherals
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HPQ WACC - Weighted Average Cost of Capital

The WACC of HP Inc (HPQ) is 9.1%.

The Cost of Equity of HP Inc (HPQ) is 11.05%.
The Cost of Debt of HP Inc (HPQ) is 4.65%.

Range Selected
Cost of equity 9.60% - 12.50% 11.05%
Tax rate 12.80% - 14.20% 13.50%
Cost of debt 4.50% - 4.80% 4.65%
WACC 8.0% - 10.1% 9.1%
WACC

HPQ 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 1.36
Additional risk adjustments 0.0% 0.5%
Cost of equity 9.60% 12.50%
Tax rate 12.80% 14.20%
Debt/Equity ratio 0.4 0.4
Cost of debt 4.50% 4.80%
After-tax WACC 8.0% 10.1%
Selected WACC 9.1%

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 (11.05%) = 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.