VAC
Marriott Vacations Worldwide Corp
Price:  
73.83 
USD
Volume:  
5,111,637.00
United States | Hotels, Restaurants & Leisure
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VAC WACC - Weighted Average Cost of Capital

The WACC of Marriott Vacations Worldwide Corp (VAC) is 6.0%.

The Cost of Equity of Marriott Vacations Worldwide Corp (VAC) is 10.45%.
The Cost of Debt of Marriott Vacations Worldwide Corp (VAC) is 5.80%.

Range Selected
Cost of equity 8.70% - 12.20% 10.45%
Tax rate 31.30% - 34.40% 32.85%
Cost of debt 4.10% - 7.50% 5.80%
WACC 4.8% - 7.3% 6.0%
WACC

VAC WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.06 1.31
Additional risk adjustments 0.0% 0.5%
Cost of equity 8.70% 12.20%
Tax rate 31.30% 34.40%
Debt/Equity ratio 2.05 2.05
Cost of debt 4.10% 7.50%
After-tax WACC 4.8% 7.3%
Selected WACC 6.0%

VAC'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 VAC:

cost_of_equity (10.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.06) + 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.