PBCT
People's United Financial Inc
Price:  
19.41 
USD
Volume:  
128,902,000
United States | Banks

PBCT WACC - Weighted Average Cost of Capital

The WACC of People's United Financial Inc (PBCT) is 8.0%.

The Cost of Equity of People's United Financial Inc (PBCT) is 8.6%.
The Cost of Debt of People's United Financial Inc (PBCT) is 5%.

RangeSelected
Cost of equity7.4% - 9.8%8.6%
Tax rate20.3% - 23.9%22.1%
Cost of debt5.0% - 5.0%5%
WACC6.9% - 9.0%8.0%
WACC

PBCT WACC calculation

CategoryLowHigh
Long-term bond rate3.2%3.7%
Equity market risk premium4.2%5.2%
Adjusted beta11.08
Additional risk adjustments0.0%0.5%
Cost of equity7.4%9.8%
Tax rate20.3%23.9%
Debt/Equity ratio
0.170.17
Cost of debt5.0%5.0%
After-tax WACC6.9%9.0%
Selected WACC8.0%

PBCT'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 PBCT:

cost_of_equity (8.60%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (1) + 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.