IBKR
Interactive Brokers Group Inc
Price:  
63.61 
USD
Volume:  
7,971,810.00
United States | Capital Markets
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IBKR WACC - Weighted Average Cost of Capital

The WACC of Interactive Brokers Group Inc (IBKR) is 8.6%.

The Cost of Equity of Interactive Brokers Group Inc (IBKR) is 7.30%.
The Cost of Debt of Interactive Brokers Group Inc (IBKR) is 18.20%.

Range Selected
Cost of equity 6.00% - 8.60% 7.30%
Tax rate 7.80% - 8.00% 7.90%
Cost of debt 15.60% - 20.80% 18.20%
WACC 7.1% - 10.0% 8.6%
WACC

IBKR WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.47 0.67
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.00% 8.60%
Tax rate 7.80% 8.00%
Debt/Equity ratio 0.15 0.15
Cost of debt 15.60% 20.80%
After-tax WACC 7.1% 10.0%
Selected WACC 8.6%

IBKR'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 IBKR:

cost_of_equity (7.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.47) + 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.