VG WACC - Weighted Average Cost of Capital

The WACC of Vonage Holdings Corp (VG) is 6.0%.

The Cost of Equity of Vonage Holdings Corp (VG) is 7.50%.

The Cost of Debt of Vonage Holdings Corp (VG) is 4.90%.

	Range	Selected
Cost of equity	5.90% - 9.10%	7.50%
Tax rate	13.80% - 17.30%	15.55%
Cost of debt	4.90% - 4.90%	4.90%
WACC	5.2% - 6.8%	6.0%

WACC

VG WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.45	0.75

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.90%	9.10%

Tax rate	13.80%	17.30%
Debt/Equity ratio	0.82	0.82
Cost of debt	4.90%	4.90%

After-tax WACC	5.2%	6.8%


Selected WACC	6.0%

VG'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 VG:

cost_of_equity (7.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.45) + 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.