WBD WACC - Weighted Average Cost of Capital

The WACC of Warner Bros Discovery Inc (WBD) is 11.4%.

The Cost of Equity of Warner Bros Discovery Inc (WBD) is 10.40%.

The Cost of Debt of Warner Bros Discovery Inc (WBD) is 14.90%.

	Range	Selected
Cost of equity	9.00% - 11.80%	10.40%
Tax rate	17.70% - 19.30%	18.50%
Cost of debt	5.90% - 23.90%	14.90%
WACC	6.5% - 16.2%	11.4%

WACC

WBD WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	1.11	1.24

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.00%	11.80%

Tax rate	17.70%	19.30%
Debt/Equity ratio	1.43	1.43
Cost of debt	5.90%	23.90%

After-tax WACC	6.5%	16.2%


Selected WACC	11.4%

WBD'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 WBD:

cost_of_equity (10.40%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.11) + 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.