ABR
Arbor Realty Trust Inc
Price:  
10.36 
USD
Volume:  
2,744,640.00
United States | Mortgage Real Estate Investment Trusts (REITs)
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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 6.85%.
The Cost of Debt of Arbor Realty Trust Inc (ABR) is 14.45%.

Range Selected
Cost of equity 5.90% - 7.80% 6.85%
Tax rate 5.70% - 8.20% 6.95%
Cost of debt 5.00% - 23.90% 14.45%
WACC 4.9% - 19.5% 12.2%
WACC

ABR WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.44 0.53
Additional risk adjustments 0.0% 0.5%
Cost of equity 5.90% 7.80%
Tax rate 5.70% 8.20%
Debt/Equity ratio 4.83 4.83
Cost of debt 5.00% 23.90%
After-tax WACC 4.9% 19.5%
Selected WACC 12.2%

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 (6.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.44) + 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.