The WACC of Andatee China Marine Fuel Services Corp (AMCF) is 13.5%.
| Range | Selected | |
| Cost of equity | 13,867,994.20% - 39,798,866.20% | 26,833,430.20% |
| Tax rate | 31.40% - 33.90% | 32.65% |
| Cost of debt | 12.70% - 23.90% | 18.30% |
| WACC | 9.3% - 17.6% | 13.5% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 3.01478051e+06 | 7.10693952e+06 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 13,867,994.20% | 39,798,866.20% |
| Tax rate | 31.40% | 33.90% |
| Debt/Equity ratio | 2.13622807e+07 | 2.13622807e+07 |
| Cost of debt | 12.70% | 23.90% |
| After-tax WACC | 9.3% | 17.6% |
| Selected WACC | 13.5% | |
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 AMCF:
cost_of_equity (26,833,430.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (3.01478051e+06) + 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.