AGM
Federal Agricultural Mortgage Corp
Price:  
188.14 
USD
Volume:  
74,955.00
United States | Thrifts & Mortgage Finance
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AGM WACC - Weighted Average Cost of Capital

The WACC of Federal Agricultural Mortgage Corp (AGM) is 11.2%.

The Cost of Equity of Federal Agricultural Mortgage Corp (AGM) is 14.30%.
The Cost of Debt of Federal Agricultural Mortgage Corp (AGM) is 13.95%.

Range Selected
Cost of equity 7.40% - 21.20% 14.30%
Tax rate 21.00% - 21.00% 21.00%
Cost of debt 4.00% - 23.90% 13.95%
WACC 3.4% - 19.0% 11.2%
WACC

AGM WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.78 2.92
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.40% 21.20%
Tax rate 21.00% 21.00%
Debt/Equity ratio 14.25 14.25
Cost of debt 4.00% 23.90%
After-tax WACC 3.4% 19.0%
Selected WACC 11.2%

AGM'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 AGM:

cost_of_equity (14.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.78) + 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.