The WACC of Codiak BioSciences, Inc. (CDAK) is 8.2%.
| Range | Selected | |
| Cost of equity | 12.60% - 17.70% | 15.15% |
| Tax rate | 26.20% - 27.00% | 26.60% |
| Cost of debt | 7.00% - 11.80% | 9.40% |
| WACC | 6.3% - 10.1% | 8.2% |
| Category | Low | High |
| Long-term bond rate | 4.2% | 4.7% |
| Equity market risk premium | 5.0% | 6.0% |
| Adjusted beta | 1.68 | 2.1 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.60% | 17.70% |
| Tax rate | 26.20% | 27.00% |
| Debt/Equity ratio | 5.33 | 5.33 |
| Cost of debt | 7.00% | 11.80% |
| After-tax WACC | 6.3% | 10.1% |
| Selected WACC | 8.2% | |
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 CDAK:
cost_of_equity (15.15%) = risk_free_rate (4.45%) + equity_risk_premium (5.50%) * adjusted_beta (1.68) + 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.