The WACC of Ballistic Recovery Systems Inc (BRSI) is 5.9%.
| Range | Selected | |
| Cost of equity | 921.90% - 6,440.00% | 3,680.95% |
| Tax rate | 34.30% - 37.80% | 36.05% |
| Cost of debt | 7.00% - 7.00% | 7.00% |
| WACC | 5.0% - 6.9% | 5.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 199.58 | 1149.13 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 921.90% | 6,440.00% |
| Tax rate | 34.30% | 37.80% |
| Debt/Equity ratio | 2574.35 | 2574.35 |
| Cost of debt | 7.00% | 7.00% |
| After-tax WACC | 5.0% | 6.9% |
| 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 BRSI:
cost_of_equity (3,680.95%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (199.58) + 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.