IAA
IAA Inc
Price:  
39.89 
USD
Volume:  
22,187,500.00
United States | Commercial Services & Supplies
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IAA WACC - Weighted Average Cost of Capital

The WACC of IAA Inc (IAA) is 8.4%.

The Cost of Equity of IAA Inc (IAA) is 9.50%.
The Cost of Debt of IAA Inc (IAA) is 4.55%.

Range Selected
Cost of equity 8.30% - 10.70% 9.50%
Tax rate 24.20% - 24.70% 24.45%
Cost of debt 4.30% - 4.80% 4.55%
WACC 7.4% - 9.4% 8.4%
WACC

IAA WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.97 1.04
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.30% 10.70%
Tax rate 24.20% 24.70%
Debt/Equity ratio 0.23 0.23
Cost of debt 4.30% 4.80%
After-tax WACC 7.4% 9.4%
Selected WACC 8.4%

IAA'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 IAA:

cost_of_equity (9.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.97) + 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.