LGF.A WACC - Weighted Average Cost of Capital

The WACC of Lions Gate Entertainment Corp (LGF.A) is 12.0%.

The Cost of Equity of Lions Gate Entertainment Corp (LGF.A) is 12.45%.

The Cost of Debt of Lions Gate Entertainment Corp (LGF.A) is 12.90%.

	Range	Selected
Cost of equity	10.60% - 14.30%	12.45%
Tax rate	4.00% - 9.70%	6.85%
Cost of debt	4.90% - 20.90%	12.90%
WACC	6.7% - 17.3%	12.0%

WACC

LGF.A WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	1.47	1.68

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.60%	14.30%

Tax rate	4.00%	9.70%
Debt/Equity ratio	1.96	1.96
Cost of debt	4.90%	20.90%

After-tax WACC	6.7%	17.3%


Selected WACC	12.0%

LGF.A'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 LGF.A:

cost_of_equity (12.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.47) + 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.