CAPS WACC - Weighted Average Cost of Capital
The WACC of Capstone Therapeutics Corp (CAPS) is 6.8%.
| Range | Selected | |
| Cost of equity | 6.1% - 8.5% | 7.3% |
| Tax rate | 5.0% - 6.3% | 5.65% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.8% - 7.8% | 6.8% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.48 | 0.66 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.1% | 8.5% |
| Tax rate | 5.0% | 6.3% |
| Debt/Equity ratio | 0.24 | 0.24 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.8% | 7.8% |
| Selected WACC | 6.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| CAPS | Capstone Therapeutics Corp | 0.24 | 0.48 | 0.39 |
| BIEI | Premier Biomedical Inc | 0.37 | 0.54 | 0.4 |
| BSSP | Cantech Holding Inc | 1416.55 | 0 | 0 |
| HSTC | HST Global Inc | 0 | 0.79 | 0.79 |
| IMUC | ImmunoCellular Therapeutics Ltd | 0.22 | 1.11 | 0.92 |
| NNBP | Nanobac Pharmaceuticals Inc | 16520.38 | 0 | 0 |
| NSPX | Inspyr Therapeutics Inc | 2.77 | 1.09 | 0.3 |
| OBMP | OncBioMune Pharmaceuticals Inc | 0 | 1.09 | 1.09 |
| SPHS | Sophiris Bio Inc | 203394 | 1.78 | 0 |
| Low | High | |
| Unlevered beta | 0.32 | 0.4 |
| Relevered beta | 0.22 | 0.49 |
| Adjusted relevered beta | 0.48 | 0.66 |
CAPS'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 CAPS:
cost_of_equity (7.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.48) + 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.