NWBI
Northwest Bancshares Inc
Price:  
13.53 
USD
Volume:  
472,825.00
United States | Thrifts & Mortgage Finance
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NWBI WACC - Weighted Average Cost of Capital

The WACC of Northwest Bancshares Inc (NWBI) is 8.5%.

The Cost of Equity of Northwest Bancshares Inc (NWBI) is 9.20%.
The Cost of Debt of Northwest Bancshares Inc (NWBI) is 5.00%.

Range Selected
Cost of equity 7.90% - 10.50% 9.20%
Tax rate 22.80% - 23.00% 22.90%
Cost of debt 5.00% - 5.00% 5.00%
WACC 7.4% - 9.7% 8.5%
WACC

NWBI WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.89 1
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.90% 10.50%
Tax rate 22.80% 23.00%
Debt/Equity ratio 0.14 0.14
Cost of debt 5.00% 5.00%
After-tax WACC 7.4% 9.7%
Selected WACC 8.5%

NWBI'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 NWBI:

cost_of_equity (9.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.89) + 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.