The WACC of Akumin Inc (AKU) is 11.2%.
| Range | Selected | |
| Cost of equity | 11.80% - 20.90% | 16.35% |
| Tax rate | 14.20% - 22.00% | 18.10% |
| Cost of debt | 9.10% - 17.00% | 13.05% |
| WACC | 8.3% - 14.1% | 11.2% |
| Category | Low | High |
| Long-term bond rate | 4.2% | 4.7% |
| Equity market risk premium | 5.0% | 6.0% |
| Adjusted beta | 1.53 | 2.62 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.80% | 20.90% |
| Tax rate | 14.20% | 22.00% |
| Debt/Equity ratio | 8.08 | 8.08 |
| Cost of debt | 9.10% | 17.00% |
| After-tax WACC | 8.3% | 14.1% |
| Selected WACC | 11.2% | |
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 AKU:
cost_of_equity (16.35%) = risk_free_rate (4.45%) + equity_risk_premium (5.50%) * adjusted_beta (1.53) + 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.