BTHE WACC - Weighted Average Cost of Capital
The WACC of Boston Therapeutics Inc (BTHE) is 5.5%.
| Range | Selected | |
| Cost of equity | 5.1% - 7.3% | 6.2% |
| Tax rate | 27.0% - 27.0% | 27% |
| Cost of debt | 4.0% - 7.0% | 5.5% |
| WACC | 4.4% - 6.6% | 5.5% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 0.45 | 0.6 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.1% | 7.3% |
| Tax rate | 27.0% | 27.0% |
| Debt/Equity ratio | 0.44 | 0.44 |
| Cost of debt | 4.0% | 7.0% |
| After-tax WACC | 4.4% | 6.6% |
| Selected WACC | 5.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| BTHE | Boston Therapeutics Inc | 0.44 | 0.22 | 0.17 |
| ACUR | Acura Pharmaceuticals Inc | 0.15 | -12.28 | -11.07 |
| CBGL | Cannabis Global, Inc. | 5933.1 | 138.9 | 0.03 |
| CDXI | Cardax Inc | 59601.68 | 178.31 | 0 |
| GBLX | GB Sciences Inc | 14.41 | -81.63 | -7.09 |
| MDCN | Medican Enterprises Inc | 269.66 | -122.21 | -0.62 |
| NPTX | Neuropathix Inc | 67.83 | 1.83 | 0.04 |
| QNTA | Quanta Inc | 60.86 | -3.32 | -0.07 |
| SNNAQ | Sienna Biopharmaceuticals Inc | 974603.7 | 0 | 0 |
| Low | High | |
| Unlevered beta | -0.06 | 0 |
| Relevered beta | 0.18 | 0.4 |
| Adjusted relevered beta | 0.45 | 0.6 |
BTHE'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 BTHE:
cost_of_equity (6.20%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (0.45) + 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.