AMRC
Ameresco Inc
Price:  
17.88 
USD
Volume:  
775,140.00
United States | Construction & Engineering
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Ameresco WACC - Weighted Average Cost of Capital

The WACC of Ameresco Inc (AMRC) is 12.5%.

The Cost of Equity of Ameresco Inc (AMRC) is 18.50%.
The Cost of Debt of Ameresco Inc (AMRC) is 11.35%.

Range Selected
Cost of equity 15.90% - 21.10% 18.50%
Tax rate 5.10% - 27.70% 16.40%
Cost of debt 7.10% - 15.60% 11.35%
WACC 10.1% - 14.9% 12.5%
WACC

Ameresco WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 2.63 2.9
Additional risk adjustments 0.0% 0.5%
Cost of equity 15.90% 21.10%
Tax rate 5.10% 27.70%
Debt/Equity ratio 1.71 1.71
Cost of debt 7.10% 15.60%
After-tax WACC 10.1% 14.9%
Selected WACC 12.5%

Ameresco'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 Ameresco:

cost_of_equity (18.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (2.63) + 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.