The WACC of Accelerate Diagnostics Inc (AXDX) is 5.9%.
| Range | Selected | |
| Cost of equity | 4.30% - 201.00% | 102.65% |
| Tax rate | 0.10% - 0.10% | 0.10% |
| Cost of debt | 4.00% - 7.00% | 5.50% |
| WACC | 4.0% - 7.8% | 5.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | -26.32 | 13.33 |
| Additional risk adjustments | 121.5% | 122.0% |
| Cost of equity | 4.30% | 201.00% |
| Tax rate | 0.10% | 0.10% |
| Debt/Equity ratio | 226.69 | 226.69 |
| Cost of debt | 4.00% | 7.00% |
| After-tax WACC | 4.0% | 7.8% |
| Selected WACC | 5.9% | |
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 AXDX:
cost_of_equity (102.65%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (-26.32) + risk_adjustments (121.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.