Question 1

What is The Southern Company's WACC?

Accepted Answer

The Southern Company (SO) has a Weighted Average Cost of Capital (WACC) of 5.59%. This is calculated using a Cost of Equity of 6.65% (via CAPM with a beta of 0.24) and a pre-tax Cost of Debt of 4.92%, with an equity weight of 61.80% in the capital structure.

Question 2

Is The Southern Company's WACC high or low?

Accepted Answer

The Southern Company's WACC of 5.59% is below the typical range of 8-12% for most companies, indicating relatively low cost of capital and lower risk. WACC is used as the discount rate in DCF valuations — a lower WACC results in higher present values of future cash flows.

Question 3

How is The Southern Company's WACC calculated?

Accepted Answer

The Southern Company's WACC is calculated using the formula: WACC = (E/V × Re) + (D/V × Rd × (1-T)). The Cost of Equity (Re) of 6.65% is derived from the CAPM model using a beta of 0.24. The pre-tax Cost of Debt (Rd) is 4.92%. The capital structure is 61.80% equity and 38.20% debt.

The Southern Company (SO) — WACC 分析

WACC 构成

解读

The Southern Company（SO）WACC：5.59%

WACC计算器

The Southern Company（SO） WACC 解读

SO 公司分析

SO DCF 估值

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