PK
Park Hotels & Resorts Inc
Price:  
10.84 
USD
Volume:  
1,958,126
United States | Equity Real Estate Investment Trusts (REITs)

PK WACC - Weighted Average Cost of Capital

The WACC of Park Hotels & Resorts Inc (PK) is 7.8%.

The Cost of Equity of Park Hotels & Resorts Inc (PK) is 10.75%.
The Cost of Debt of Park Hotels & Resorts Inc (PK) is 6.9%.

RangeSelected
Cost of equity9.0% - 12.5%10.75%
Tax rate0.4% - 10.8%5.6%
Cost of debt4.7% - 9.1%6.9%
WACC6.1% - 9.5%7.8%
WACC

PK WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta1.121.37
Additional risk adjustments0.0%0.5%
Cost of equity9.0%12.5%
Tax rate0.4%10.8%
Debt/Equity ratio
2.112.11
Cost of debt4.7%9.1%
After-tax WACC6.1%9.5%
Selected WACC7.8%

PK'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 PK:

cost_of_equity (10.75%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.12) + 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.