LEN
Lennar Corp
Price:  
110.20 
USD
Volume:  
1,803,445.00
United States | Household Durables
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Lennar WACC - Weighted Average Cost of Capital

The WACC of Lennar Corp (LEN) is 7.7%.

The Cost of Equity of Lennar Corp (LEN) is 8.35%.
The Cost of Debt of Lennar Corp (LEN) is 4.25%.

Range Selected
Cost of equity 7.00% - 9.70% 8.35%
Tax rate 23.10% - 23.40% 23.25%
Cost of debt 4.00% - 4.50% 4.25%
WACC 6.5% - 8.9% 7.7%
WACC

Lennar WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.68 0.86
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.00% 9.70%
Tax rate 23.10% 23.40%
Debt/Equity ratio 0.14 0.14
Cost of debt 4.00% 4.50%
After-tax WACC 6.5% 8.9%
Selected WACC 7.7%

Lennar'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 Lennar:

cost_of_equity (8.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.68) + 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.