USM
United States Cellular Corp
Price:  
63.07 
USD
Volume:  
672,190.00
United States | Wireless Telecommunication Services
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USM WACC - Weighted Average Cost of Capital

The WACC of United States Cellular Corp (USM) is 6.6%.

The Cost of Equity of United States Cellular Corp (USM) is 6.95%.
The Cost of Debt of United States Cellular Corp (USM) is 10.70%.

Range Selected
Cost of equity 5.50% - 8.40% 6.95%
Tax rate 37.80% - 46.40% 42.10%
Cost of debt 5.80% - 15.60% 10.70%
WACC 4.8% - 8.4% 6.6%
WACC

USM WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.36 0.63
Additional risk adjustments 0.0% 0.5%
Cost of equity 5.50% 8.40%
Tax rate 37.80% 46.40%
Debt/Equity ratio 0.53 0.53
Cost of debt 5.80% 15.60%
After-tax WACC 4.8% 8.4%
Selected WACC 6.6%

USM'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 USM:

cost_of_equity (6.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.36) + 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.