NCLH
Norwegian Cruise Line Holdings Ltd
Price:  
18.86 
USD
Volume:  
14,725,685.00
United States | Hotels, Restaurants & Leisure
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NCLH WACC - Weighted Average Cost of Capital

The WACC of Norwegian Cruise Line Holdings Ltd (NCLH) is 9.5%.

The Cost of Equity of Norwegian Cruise Line Holdings Ltd (NCLH) is 10.30%.
The Cost of Debt of Norwegian Cruise Line Holdings Ltd (NCLH) is 8.95%.

Range Selected
Cost of equity 7.60% - 13.00% 10.30%
Tax rate 0.30% - 0.90% 0.60%
Cost of debt 8.80% - 9.10% 8.95%
WACC 8.3% - 10.6% 9.5%
WACC

NCLH WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.82 1.45
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.60% 13.00%
Tax rate 0.30% 0.90%
Debt/Equity ratio 1.55 1.55
Cost of debt 8.80% 9.10%
After-tax WACC 8.3% 10.6%
Selected WACC 9.5%

NCLH'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 NCLH:

cost_of_equity (10.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.82) + 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.