INN
Summit Hotel Properties Inc
Price:  
4.36 
USD
Volume:  
1,492,059.00
United States | Equity Real Estate Investment Trusts (REITs)
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INN WACC - Weighted Average Cost of Capital

The WACC of Summit Hotel Properties Inc (INN) is 6.7%.

The Cost of Equity of Summit Hotel Properties Inc (INN) is 11.00%.
The Cost of Debt of Summit Hotel Properties Inc (INN) is 6.00%.

Range Selected
Cost of equity 8.20% - 13.80% 11.00%
Tax rate 7.50% - 18.20% 12.85%
Cost of debt 5.00% - 7.00% 6.00%
WACC 5.5% - 7.8% 6.7%
WACC

INN WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.94 1.59
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.20% 13.80%
Tax rate 7.50% 18.20%
Debt/Equity ratio 2.88 2.88
Cost of debt 5.00% 7.00%
After-tax WACC 5.5% 7.8%
Selected WACC 6.7%

INN'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 INN:

cost_of_equity (11.00%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.94) + 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.