PRAA
PRA Group Inc
Price:  
14.75 
USD
Volume:  
334,243.00
United States | Consumer Finance
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PRAA WACC - Weighted Average Cost of Capital

The WACC of PRA Group Inc (PRAA) is 7.7%.

The Cost of Equity of PRA Group Inc (PRAA) is 11.90%.
The Cost of Debt of PRA Group Inc (PRAA) is 8.80%.

Range Selected
Cost of equity 9.30% - 14.50% 11.90%
Tax rate 19.60% - 20.60% 20.10%
Cost of debt 5.20% - 12.40% 8.80%
WACC 5.0% - 10.5% 7.7%
WACC

PRAA WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.18 1.72
Additional risk adjustments 0.0% 0.5%
Cost of equity 9.30% 14.50%
Tax rate 19.60% 20.60%
Debt/Equity ratio 5.83 5.83
Cost of debt 5.20% 12.40%
After-tax WACC 5.0% 10.5%
Selected WACC 7.7%

PRAA'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 PRAA:

cost_of_equity (11.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.18) + 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.