The WACC of Ciscom Corp (CISC.CN) is 5.0%.
| Range | Selected | |
| Cost of equity | 3.40% - 3.60% | 3.50% |
| Tax rate | 19.80% - 25.60% | 22.70% |
| Cost of debt | 7.00% - 8.50% | 7.75% |
| WACC | 4.7% - 5.2% | 5.0% |
| Category | Low | High |
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | -0.75 | -0.75 |
| Additional risk adjustments | 4.0% | 4.5% |
| Cost of equity | 3.40% | 3.60% |
| Tax rate | 19.80% | 25.60% |
| Debt/Equity ratio | 1.44 | 1.44 |
| Cost of debt | 7.00% | 8.50% |
| After-tax WACC | 4.7% | 5.2% |
| Selected WACC | 5.0% | |
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 CISC.CN:
cost_of_equity (3.50%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (-0.75) + risk_adjustments (4.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.