ABR
Arbor Realty Trust Inc
Price:  
10.9 
USD
Volume:  
1,941,126
United States | Mortgage Real Estate Investment Trusts (REITs)

ABR WACC - Weighted Average Cost of Capital

The WACC of Arbor Realty Trust Inc (ABR) is 12.2%.

The Cost of Equity of Arbor Realty Trust Inc (ABR) is 6.7%.
The Cost of Debt of Arbor Realty Trust Inc (ABR) is 14.45%.

RangeSelected
Cost of equity5.8% - 7.6%6.7%
Tax rate5.7% - 8.2%6.95%
Cost of debt5.0% - 23.9%14.45%
WACC4.9% - 19.5%12.2%
WACC

ABR WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta0.420.49
Additional risk adjustments0.0%0.5%
Cost of equity5.8%7.6%
Tax rate5.7%8.2%
Debt/Equity ratio
4.914.91
Cost of debt5.0%23.9%
After-tax WACC4.9%19.5%
Selected WACC12.2%

ABR'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 ABR:

cost_of_equity (6.70%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.42) + 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.