TVTY WACC - Weighted Average Cost of Capital

The WACC of Tivity Health Inc (TVTY) is 10.9%.

The Cost of Equity of Tivity Health Inc (TVTY) is 7.90%.

The Cost of Debt of Tivity Health Inc (TVTY) is 31.90%.

	Range	Selected
Cost of equity	6.70% - 9.10%	7.90%
Tax rate	22.80% - 26.50%	24.65%
Cost of debt	4.50% - 59.30%	31.90%
WACC	6.1% - 15.6%	10.9%

WACC

TVTY WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	4.2%	5.2%
Adjusted beta	0.84	0.93

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.70%	9.10%

Tax rate	22.80%	26.50%
Debt/Equity ratio	0.23	0.23
Cost of debt	4.50%	59.30%

After-tax WACC	6.1%	15.6%


Selected WACC	10.9%

TVTY'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 TVTY:

cost_of_equity (7.90%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (0.84) + 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.