ALEC
Alector Inc
Price:  
1.30 
USD
Volume:  
1,281,758.00
United States | Biotechnology
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Alector WACC - Weighted Average Cost of Capital

The WACC of Alector Inc (ALEC) is 8.8%.

The Cost of Equity of Alector Inc (ALEC) is 9.15%.
The Cost of Debt of Alector Inc (ALEC) is 5.00%.

Range Selected
Cost of equity 6.90% - 11.40% 9.15%
Tax rate 26.20% - 27.00% 26.60%
Cost of debt 5.00% - 5.00% 5.00%
WACC 6.7% - 10.9% 8.8%
WACC

Alector WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.66 1.16
Additional risk adjustments 0.0% 0.5%
Cost of equity 6.90% 11.40%
Tax rate 26.20% 27.00%
Debt/Equity ratio 0.07 0.07
Cost of debt 5.00% 5.00%
After-tax WACC 6.7% 10.9%
Selected WACC 8.8%

Alector'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 Alector:

cost_of_equity (9.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.66) + 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.