CERC
Cerecor Inc
Price:  
2.93 
USD
Volume:  
271,780
United States | Pharmaceuticals

CERC WACC - Weighted Average Cost of Capital

The WACC of Cerecor Inc (CERC) is 6.7%.

The Cost of Equity of Cerecor Inc (CERC) is 8.4%.
The Cost of Debt of Cerecor Inc (CERC) is 5%.

RangeSelected
Cost of equity6.5% - 10.3%8.4%
Tax rate1.1% - 1.7%1.4%
Cost of debt5.0% - 5.0%5%
WACC5.7% - 7.6%6.7%
WACC

CERC WACC calculation

CategoryLowHigh
Long-term bond rate3.2%3.7%
Equity market risk premium4.2%5.2%
Adjusted beta0.781.17
Additional risk adjustments0.0%0.5%
Cost of equity6.5%10.3%
Tax rate1.1%1.7%
Debt/Equity ratio
11
Cost of debt5.0%5.0%
After-tax WACC5.7%7.6%
Selected WACC6.7%

CERC'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 CERC:

cost_of_equity (8.40%) = risk_free_rate (3.45%) + equity_risk_premium (4.70%) * adjusted_beta (0.78) + 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.