LPRO
Open Lending Corp
Price:  
1.79 
USD
Volume:  
897,476
United States | Capital Markets

LPRO WACC - Weighted Average Cost of Capital

The WACC of Open Lending Corp (LPRO) is 6.2%.

The Cost of Equity of Open Lending Corp (LPRO) is 7.2%.
The Cost of Debt of Open Lending Corp (LPRO) is 6.2%.

RangeSelected
Cost of equity6.1% - 8.3%7.2%
Tax rate23.6% - 25.7%24.65%
Cost of debt5.4% - 7.0%6.2%
WACC5.4% - 7.1%6.2%
WACC

LPRO WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta0.490.61
Additional risk adjustments0.0%0.5%
Cost of equity6.1%8.3%
Tax rate23.6%25.7%
Debt/Equity ratio
0.610.61
Cost of debt5.4%7.0%
After-tax WACC5.4%7.1%
Selected WACC6.2%

LPRO'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 LPRO:

cost_of_equity (7.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.49) + 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.