CPZ WACC - Weighted Average Cost of Capital
The WACC of Calamos Long/Short Equity & Dynamic Income Trust (CPZ) is 7.9%.
| Range | Selected | |
| Cost of equity | 12.0% - 14.7% | 13.35% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 4.0% - 4.8% | 4.4% |
| WACC | 7.2% - 8.7% | 7.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.76 | 1.76 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 12.0% | 14.7% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 1.15 | 1.15 |
| Cost of debt | 4.0% | 4.8% |
| After-tax WACC | 7.2% | 8.7% |
| Selected WACC | 7.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| CPZ | Calamos Long/Short Equity & Dynamic Income Trust | 1.15 | 3.55 | 1.93 |
| Low | High | |
| Unlevered beta | 1.93 | 1.93 |
| Relevered beta | 2.13 | 2.13 |
| Adjusted relevered beta | 1.76 | 1.76 |
CPZ'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 CPZ:
cost_of_equity (13.35%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.76) + 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.