LLOY.L
Lloyds Banking Group PLC
Price:  
77.22 
GBP
Volume:  
198,911,840.00
United Kingdom | Banks
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LLOY.L WACC - Weighted Average Cost of Capital

The WACC of Lloyds Banking Group PLC (LLOY.L) is 6.8%.

The Cost of Equity of Lloyds Banking Group PLC (LLOY.L) is 13.80%.
The Cost of Debt of Lloyds Banking Group PLC (LLOY.L) is 5.00%.

Range Selected
Cost of equity 12.00% - 15.60% 13.80%
Tax rate 16.70% - 20.80% 18.75%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.3% - 7.2% 6.8%
WACC

LLOY.L WACC calculation

Category Low High
Long-term bond rate 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 1.34 1.52
Additional risk adjustments 0.0% 0.5%
Cost of equity 12.00% 15.60%
Tax rate 16.70% 20.80%
Debt/Equity ratio 2.61 2.61
Cost of debt 5.00% 5.00%
After-tax WACC 6.3% 7.2%
Selected WACC 6.8%

LLOY.L'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 LLOY.L:

cost_of_equity (13.80%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (1.34) + 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.