NCLH WACC - Weighted Average Cost of Capital

The WACC of Norwegian Cruise Line Holdings Ltd (NCLH) is 10.8%.

The Cost of Equity of Norwegian Cruise Line Holdings Ltd (NCLH) is 15.10%.

The Cost of Debt of Norwegian Cruise Line Holdings Ltd (NCLH) is 8.15%.

	Range	Selected
Cost of equity	12.70% - 17.50%	15.10%
Tax rate	0.30% - 0.90%	0.60%
Cost of debt	7.50% - 8.80%	8.15%
WACC	9.5% - 12.1%	10.8%

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	1.91	2.26

Additional risk adjustments	0.0%	0.5%
Cost of equity	12.70%	17.50%

Tax rate	0.30%	0.90%
Debt/Equity ratio	1.6	1.6
Cost of debt	7.50%	8.80%

After-tax WACC	9.5%	12.1%


Selected WACC	10.8%

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 (15.10%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.91) + 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.