SC
Santander Consumer USA Holdings Inc
Price:  
41.60 
USD
Volume:  
9,483,140.00
United States | Consumer Finance
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SC WACC - Weighted Average Cost of Capital

The WACC of Santander Consumer USA Holdings Inc (SC) is 5.7%.

The Cost of Equity of Santander Consumer USA Holdings Inc (SC) is 12.45%.
The Cost of Debt of Santander Consumer USA Holdings Inc (SC) is 5.00%.

Range Selected
Cost of equity 10.20% - 14.70% 12.45%
Tax rate 25.80% - 29.50% 27.65%
Cost of debt 5.00% - 5.00% 5.00%
WACC 5.3% - 6.2% 5.7%
WACC

SC WACC calculation

Category Low High
Long-term bond rate 3.2% 3.7%
Equity market risk premium 4.2% 5.2%
Adjusted beta 1.67 2.02
Additional risk adjustments 0.0% 0.5%
Cost of equity 10.20% 14.70%
Tax rate 25.80% 29.50%
Debt/Equity ratio 3.23 3.23
Cost of debt 5.00% 5.00%
After-tax WACC 5.3% 6.2%
Selected WACC 5.7%

SC'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 SC:

cost_of_equity (12.45%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (1.67) + 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.