The WACC of ALUF Holdings Inc (AHIX) is 6.0%.
Range | Selected | |
Cost of equity | 5.3% - 6.7% | 6% |
Tax rate | 26.2% - 27.0% | 26.6% |
Cost of debt | 4.0% - 4.5% | 4.25% |
WACC | 5.3% - 6.7% | 6.0% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.32 | 0.33 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.3% | 6.7% |
Tax rate | 26.2% | 27.0% |
Debt/Equity ratio | 0.02 | 0.02 |
Cost of debt | 4.0% | 4.5% |
After-tax WACC | 5.3% | 6.7% |
Selected WACC | 6.0% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
AHIX | ALUF Holdings Inc | 0.02 | -1.02 | -1 |
BABL | Buildablock Corp. | 0 | -0.03 | -0.03 |
BXV.CN | Bexar Ventures Inc | 0.06 | 0.95 | 0.91 |
GNTW | Globe Net Wireless Corp | 0 | 1.78 | 1.78 |
ITNF | Internet Infinity Inc | 0.11 | -0.31 | -0.28 |
SRCO | Sparta Commercial Services Inc | 1.91 | 0.69 | 0.29 |
TIPS | Tianrong Internet Products and Services Inc | 0.16 | -1.52 | -1.36 |
TLFX | Telefix Communications Holdings Inc | 0.05 | -0.42 | -0.41 |
Low | High | |
Unlevered beta | -0.31 | 0.04 |
Relevered beta | -0.01 | 0 |
Adjusted relevered beta | 0.32 | 0.33 |
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 AHIX:
cost_of_equity (6.00%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.32) + 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.