LINC WACC - Weighted Average Cost of Capital
The WACC of Lincoln Educational Services Corp (LINC) is 7.6%.
| Range | Selected | |
| Cost of equity | 5.8% - 9.7% | 7.75% |
| Tax rate | 26.8% - 29.3% | 28.05% |
| Cost of debt | 4.9% - 4.9% | 4.9% |
| WACC | 5.7% - 9.4% | 7.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.42 | 0.86 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.8% | 9.7% |
| Tax rate | 26.8% | 29.3% |
| Debt/Equity ratio | 0.04 | 0.04 |
| Cost of debt | 4.9% | 4.9% |
| After-tax WACC | 5.7% | 9.4% |
| Selected WACC | 7.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| LINC | Lincoln Educational Services Corp | 0.04 | 1.11 | 1.08 |
| APEI | American Public Education Inc | 0.19 | 0.89 | 0.78 |
| EVCI | EVCI Career Colleges Holding Corp | 25.8 | 0.49 | 0.02 |
| LEAI | Legacy Education Alliance Inc | 1723.26 | -2.06 | 0 |
| LTRE | Learning Tree International Inc | 0.31 | 0.92 | 0.75 |
| NEW | Puxin Ltd | 11.42 | 1.68 | 0.18 |
| ONE | OneSmart International Education Group Ltd | 34.06 | 0.09 | 0 |
| TIGE | Tigrent Inc | 619.02 | -0.04 | 0 |
| UTI | Universal Technical Institute Inc | 0.07 | 1 | 0.95 |
| ZVO | Zovio Inc | 0.45 | 1.27 | 0.96 |
| Low | High | |
| Unlevered beta | 0.12 | 0.76 |
| Relevered beta | 0.13 | 0.79 |
| Adjusted relevered beta | 0.42 | 0.86 |
LINC'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 LINC:
cost_of_equity (7.75%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.42) + 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.