LH WACC - Weighted Average Cost of Capital

The WACC of Laboratory Corporation of America Holdings (LH) is 6.5%.

The Cost of Equity of Laboratory Corporation of America Holdings (LH) is 7.50%.

The Cost of Debt of Laboratory Corporation of America Holdings (LH) is 4.55%.

	Range	Selected
Cost of equity	6.50% - 8.50%	7.50%
Tax rate	23.20% - 26.30%	24.75%
Cost of debt	4.00% - 5.10%	4.55%
WACC	5.7% - 7.3%	6.5%

WACC

LH WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.58	0.64

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.50%	8.50%

Tax rate	23.20%	26.30%
Debt/Equity ratio	0.31	0.31
Cost of debt	4.00%	5.10%

After-tax WACC	5.7%	7.3%


Selected WACC	6.5%

LH'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 LH:

cost_of_equity (7.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.58) + 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.