RKT
Rocket Companies Inc
Price:  
12.62 
USD
Volume:  
13,263,654.00
United States | Thrifts & Mortgage Finance
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RKT WACC - Weighted Average Cost of Capital

The WACC of Rocket Companies Inc (RKT) is 7.0%.

The Cost of Equity of Rocket Companies Inc (RKT) is 7.80%.
The Cost of Debt of Rocket Companies Inc (RKT) is 5.75%.

Range Selected
Cost of equity 6.60% - 9.00% 7.80%
Tax rate 2.60% - 3.80% 3.20%
Cost of debt 4.00% - 7.50% 5.75%
WACC 5.6% - 8.4% 7.0%
WACC

RKT WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.59 0.75
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.60% 9.00%
Tax rate 2.60% 3.80%
Debt/Equity ratio 0.54 0.54
Cost of debt 4.00% 7.50%
After-tax WACC 5.6% 8.4%
Selected WACC 7.0%

RKT'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 RKT:

cost_of_equity (7.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.59) + 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.