The WACC of Celadon Group Inc (CGIP) is 9.8%.
| Range | Selected | |
| Cost of equity | 28,335,833.30% - 37,234,433.50% | 32,785,133.40% |
| Tax rate | 37.40% - 38.70% | 38.05% |
| Cost of debt | 4.00% - 20.90% | 12.45% |
| WACC | 4.4% - 15.3% | 9.8% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 6.15996293e+06 | 6.64900511e+06 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 28,335,833.30% | 37,234,433.50% |
| Tax rate | 37.40% | 38.70% |
| Debt/Equity ratio | 1.502706667e+07 | 1.502706667e+07 |
| Cost of debt | 4.00% | 20.90% |
| After-tax WACC | 4.4% | 15.3% |
| Selected WACC | 9.8% | |
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 CGIP:
cost_of_equity (32,785,133.40%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (6.15996293e+06) + 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.