AEY WACC - Weighted Average Cost of Capital
The WACC of ADDvantage Technologies Group Inc (AEY) is 24.3%.
| Range | Selected | |
| Cost of equity | 8.1% - 13.6% | 10.85% |
| Tax rate | 1.6% - 3.9% | 2.75% |
| Cost of debt | 7.0% - 51.5% | 29.25% |
| WACC | 7.2% - 41.5% | 24.3% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.91 | 1.55 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.1% | 13.6% |
| Tax rate | 1.6% | 3.9% |
| Debt/Equity ratio | 3.52 | 3.52 |
| Cost of debt | 7.0% | 51.5% |
| After-tax WACC | 7.2% | 41.5% |
| Selected WACC | 24.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| AEY | ADDvantage Technologies Group Inc | 3.52 | 0.99 | 0.22 |
| AVT | Avnet Inc | 0.69 | 0.99 | 0.59 |
| EACO | EACO Corp | 0.02 | -0.28 | -0.27 |
| NSIT | Insight Enterprises Inc | 0.21 | 1.19 | 0.99 |
| SCSC | Scansource Inc | 0.16 | 1.21 | 1.04 |
| SEDN | SED International Holdings Inc | 1547001.9 | 130.72 | 0 |
| UUU | Universal Security Instruments Inc | 0.14 | -0.21 | -0.18 |
| CPI.AT | CPI SA | 1.06 | 1.5 | 0.74 |
| HDT.L | Holders Technology PLC | 0.06 | 0.16 | 0.15 |
| S4E.WA | S4E SA | 0.02 | 0.49 | 0.48 |
| Low | High | |
| Unlevered beta | 0.19 | 0.53 |
| Relevered beta | 0.87 | 1.82 |
| Adjusted relevered beta | 0.91 | 1.55 |
AEY'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 AEY:
cost_of_equity (10.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.91) + 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.