The WACC of Broad Street Realty Inc (BRST) is 5.2%.
| Range | Selected | |
| Cost of equity | 4.80% - 3,668.20% | 1,836.50% |
| Tax rate | 24.50% - 25.40% | 24.95% |
| Cost of debt | 6.60% - 7.00% | 6.80% |
| 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 | -0.77 | 653.37 |
| Additional risk adjustments | 4.5% | 5.0% |
| Cost of equity | 4.80% | 3,668.20% |
| Tax rate | 24.50% | 25.40% |
| Debt/Equity ratio | 17787.97 | 17787.97 |
| Cost of debt | 6.60% | 7.00% |
| 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 BRST:
cost_of_equity (1,836.50%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (-0.77) + risk_adjustments (4.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.