PRG
PROG Holdings Inc
Price:  
29.97 
USD
Volume:  
384,220.00
United States | Consumer Finance
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PRG WACC - Weighted Average Cost of Capital

The WACC of PROG Holdings Inc (PRG) is 7.2%.

The Cost of Equity of PROG Holdings Inc (PRG) is 9.00%.
The Cost of Debt of PROG Holdings Inc (PRG) is 5.15%.

Range Selected
Cost of equity 7.40% - 10.60% 9.00%
Tax rate 26.20% - 27.60% 26.90%
Cost of debt 4.90% - 5.40% 5.15%
WACC 6.1% - 8.3% 7.2%
WACC

PRG WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.77 1.02
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.40% 10.60%
Tax rate 26.20% 27.60%
Debt/Equity ratio 0.53 0.53
Cost of debt 4.90% 5.40%
After-tax WACC 6.1% 8.3%
Selected WACC 7.2%

PRG'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 PRG:

cost_of_equity (9.00%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.77) + 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.