LC
LendingClub Corp
Price:  
16.07 
USD
Volume:  
1,445,525.00
United States | Consumer Finance
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LendingClub WACC - Weighted Average Cost of Capital

The WACC of LendingClub Corp (LC) is 11.1%.

The Cost of Equity of LendingClub Corp (LC) is 10.25%.
The Cost of Debt of LendingClub Corp (LC) is 14.45%.

Range Selected
Cost of equity 8.50% - 12.00% 10.25%
Tax rate 12.90% - 24.10% 18.50%
Cost of debt 5.00% - 23.90% 14.45%
WACC 5.0% - 17.1% 11.1%
WACC

LendingClub WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.02 1.27
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.50% 12.00%
Tax rate 12.90% 24.10%
Debt/Equity ratio 5.28 5.28
Cost of debt 5.00% 23.90%
After-tax WACC 5.0% 17.1%
Selected WACC 11.1%

LendingClub'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 LendingClub:

cost_of_equity (10.25%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.02) + 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.