NNI
Nelnet Inc
Price:  
108.10 
USD
Volume:  
45,598.00
United States | Consumer Finance
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NNI WACC - Weighted Average Cost of Capital

The WACC of Nelnet Inc (NNI) is 5.3%.

The Cost of Equity of Nelnet Inc (NNI) is 8.00%.
The Cost of Debt of Nelnet Inc (NNI) is 5.50%.

Range Selected
Cost of equity 6.90% - 9.10% 8.00%
Tax rate 22.80% - 23.10% 22.95%
Cost of debt 4.00% - 7.00% 5.50%
WACC 4.2% - 6.5% 5.3%
WACC

NNI WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.67 0.75
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.90% 9.10%
Tax rate 22.80% 23.10%
Debt/Equity ratio 2.42 2.42
Cost of debt 4.00% 7.00%
After-tax WACC 4.2% 6.5%
Selected WACC 5.3%

NNI'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 NNI:

cost_of_equity (8.00%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.67) + 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.