AMS WACC - Weighted Average Cost of Capital

The WACC of American Shared Hospital Services (AMS) is 6.8%.

The Cost of Equity of American Shared Hospital Services (AMS) is 10.10%.

The Cost of Debt of American Shared Hospital Services (AMS) is 6.85%.

	Range	Selected
Cost of equity	7.40% - 12.80%	10.10%
Tax rate	26.60% - 32.30%	29.45%
Cost of debt	6.70% - 7.00%	6.85%
WACC	5.8% - 7.7%	6.8%

WACC

AMS WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.76	1.41

Additional risk adjustments	0.0%	0.5%
Cost of equity	7.40%	12.80%

Tax rate	26.60%	32.30%
Debt/Equity ratio	1.69	1.69
Cost of debt	6.70%	7.00%

After-tax WACC	5.8%	7.7%


Selected WACC	6.8%

AMS'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 AMS:

cost_of_equity (10.10%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.76) + 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.