WDR
Waddell & Reed Financial Inc
Price:  
24.98 
USD
Volume:  
335,920
United States | Capital Markets

WDR WACC - Weighted Average Cost of Capital

The WACC of Waddell & Reed Financial Inc (WDR) is 8.0%.

The Cost of Equity of Waddell & Reed Financial Inc (WDR) is 8.3%.
The Cost of Debt of Waddell & Reed Financial Inc (WDR) is 5%.

RangeSelected
Cost of equity6.9% - 9.7%8.3%
Tax rate28.0% - 31.2%29.6%
Cost of debt5.0% - 5.0%5%
WACC6.7% - 9.3%8.0%
WACC

WDR WACC calculation

CategoryLowHigh
Long-term bond rate3.2%3.7%
Equity market risk premium4.2%5.2%
Adjusted beta0.881.05
Additional risk adjustments0.0%0.5%
Cost of equity6.9%9.7%
Tax rate28.0%31.2%
Debt/Equity ratio
0.060.06
Cost of debt5.0%5.0%
After-tax WACC6.7%9.3%
Selected WACC8.0%

WDR'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 WDR:

cost_of_equity (8.30%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (0.88) + 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.