VIRT
Virtu Financial Inc
Price:  
42.48 
USD
Volume:  
761,847.00
United States | Capital Markets
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Virtu WACC - Weighted Average Cost of Capital

The WACC of Virtu Financial Inc (VIRT) is 8.5%.

The Cost of Equity of Virtu Financial Inc (VIRT) is 8.50%.
The Cost of Debt of Virtu Financial Inc (VIRT) is 10.30%.

Range Selected
Cost of equity 6.70% - 10.30% 8.50%
Tax rate 17.10% - 17.80% 17.45%
Cost of debt 5.00% - 15.60% 10.30%
WACC 5.0% - 12.0% 8.5%
WACC

Virtu WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.61 0.96
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.70% 10.30%
Tax rate 17.10% 17.80%
Debt/Equity ratio 1.88 1.88
Cost of debt 5.00% 15.60%
After-tax WACC 5.0% 12.0%
Selected WACC 8.5%

Virtu'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 Virtu:

cost_of_equity (8.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.61) + 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.