The WACC of Blue Sphere Corp (BLSP) is 5.2%.
| Range | Selected | |
| Cost of equity | 3.30% - 1,153.60% | 578.45% |
| Tax rate | 0.60% - 0.80% | 0.70% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 5.0% - 5.4% | 5.2% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | -52.62 | 162.01 |
| Additional risk adjustments | 241.5% | 242.0% |
| Cost of equity | 3.30% | 1,153.60% |
| Tax rate | 0.60% | 0.80% |
| Debt/Equity ratio | 2656.75 | 2656.75 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 5.0% | 5.4% |
| Selected WACC | 5.2% | |
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 BLSP:
cost_of_equity (578.45%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (-52.62) + risk_adjustments (241.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.