PKOH WACC - Weighted Average Cost of Capital

The WACC of Park Ohio Holdings Corp (PKOH) is 9.2%.

The Cost of Equity of Park Ohio Holdings Corp (PKOH) is 12.45%.

The Cost of Debt of Park Ohio Holdings Corp (PKOH) is 7.90%.

	Range	Selected
Cost of equity	10.20% - 14.70%	12.45%
Tax rate	11.50% - 15.30%	13.40%
Cost of debt	6.70% - 9.10%	7.90%
WACC	7.7% - 10.7%	9.2%

WACC

PKOH WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	1.37	1.75

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.20%	14.70%

Tax rate	11.50%	15.30%
Debt/Equity ratio	1.34	1.34
Cost of debt	6.70%	9.10%

After-tax WACC	7.7%	10.7%


Selected WACC	9.2%

PKOH'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 PKOH:

cost_of_equity (12.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.37) + 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.