PK WACC - Weighted Average Cost of Capital

The WACC of Park Hotels & Resorts Inc (PK) is 9.1%.

The Cost of Equity of Park Hotels & Resorts Inc (PK) is 11.45%.

The Cost of Debt of Park Hotels & Resorts Inc (PK) is 8.55%.

	Range	Selected
Cost of equity	9.80% - 13.10%	11.45%
Tax rate	0.40% - 10.80%	5.60%
Cost of debt	4.70% - 12.40%	8.55%
WACC	6.4% - 11.7%	9.1%

WACC

PK WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	1.29	1.46

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.80%	13.10%

Tax rate	0.40%	10.80%
Debt/Equity ratio	1.94	1.94
Cost of debt	4.70%	12.40%

After-tax WACC	6.4%	11.7%


Selected WACC	9.1%

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 (11.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.29) + 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.