PRAH
PRA Health Sciences Inc
Price:  
165.21 
USD
Volume:  
2,452,670.00
United States | Life Sciences Tools & Services
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PRAH WACC - Weighted Average Cost of Capital

The WACC of PRA Health Sciences Inc (PRAH) is 7.7%.

The Cost of Equity of PRA Health Sciences Inc (PRAH) is 8.25%.
The Cost of Debt of PRA Health Sciences Inc (PRAH) is 4.30%.

Range Selected
Cost of equity 6.50% - 10.00% 8.25%
Tax rate 27.00% - 29.50% 28.25%
Cost of debt 4.10% - 4.50% 4.30%
WACC 6.1% - 9.3% 7.7%
WACC

PRAH WACC calculation

Category Low High
Long-term bond rate 3.2% 3.7%
Equity market risk premium 4.2% 5.2%
Adjusted beta 0.79 1.12
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.50% 10.00%
Tax rate 27.00% 29.50%
Debt/Equity ratio 0.12 0.12
Cost of debt 4.10% 4.50%
After-tax WACC 6.1% 9.3%
Selected WACC 7.7%

PRAH'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 PRAH:

cost_of_equity (8.25%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (0.79) + 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.