Verso WACC - Weighted Average Cost of Capital
The WACC of Verso Corp (VRS) is 7.3%.
| Range | Selected | |
| Cost of equity | 6.0% - 8.6% | 7.3% |
| Tax rate | 15.9% - 32.6% | 24.25% |
| Cost of debt | 4.0% - 4.5% | 4.25% |
| WACC | 6.0% - 8.5% | 7.3% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 0.66 | 0.84 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.0% | 8.6% |
| Tax rate | 15.9% | 32.6% |
| Debt/Equity ratio | 0.01 | 0.01 |
| Cost of debt | 4.0% | 4.5% |
| After-tax WACC | 6.0% | 8.5% |
| Selected WACC | 7.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| VRS | Verso Corp | 0.01 | 1.89 | 1.88 |
| CFX.TO | Canfor Pulp Products Inc | 2.22 | 0.35 | 0.13 |
| CLW | Clearwater Paper Corp | 0.62 | 0.49 | 0.33 |
| GLT | Glatfelter Corp | 1.16 | 1.55 | 0.81 |
| ITP | IT Tech Packaging Inc | 2.76 | -0.72 | -0.23 |
| MERC | Mercer International Inc | 6.32 | 1.17 | 0.2 |
| NP | Neenah Inc | 0.86 | 1.49 | 0.89 |
| SWM | Schweitzer-Mauduit International Inc | 1.7 | 1.03 | 0.44 |
| SXP.TO | Supremex Inc | 0.94 | 1.06 | 0.61 |
| ZCOM | Impreso Inc | 0.48 | 3.55 | 2.58 |
| Low | High | |
| Unlevered beta | 0.39 | 0.69 |
| Relevered beta | 0.49 | 0.76 |
| Adjusted relevered beta | 0.66 | 0.84 |
Verso'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 Verso:
cost_of_equity (7.30%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (0.66) + 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.