PD
PagerDuty Inc
Price:  
15.67 
USD
Volume:  
633,682.00
United States | Software
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PD WACC - Weighted Average Cost of Capital

The WACC of PagerDuty Inc (PD) is 7.6%.

The Cost of Equity of PagerDuty Inc (PD) is 8.35%.
The Cost of Debt of PagerDuty Inc (PD) is 5.50%.

Range Selected
Cost of equity 5.90% - 10.80% 8.35%
Tax rate 0.60% - 2.10% 1.35%
Cost of debt 4.00% - 7.00% 5.50%
WACC 5.4% - 9.8% 7.6%
WACC

PD WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.43 1.06
Additional risk adjustments 0.0% 0.5%
Cost of equity 5.90% 10.80%
Tax rate 0.60% 2.10%
Debt/Equity ratio 0.32 0.32
Cost of debt 4.00% 7.00%
After-tax WACC 5.4% 9.8%
Selected WACC 7.6%

PD'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 PD:

cost_of_equity (8.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.43) + 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.