The WACC of Crown Electrokinetics Corp. (CRKN) is 14.6%.
| Range | Selected | |
| Cost of equity | 5.20% - 9.10% | 7.15% |
| Tax rate | 26.20% - 27.00% | 26.60% |
| Cost of debt | 7.00% - 34.90% | 20.95% |
| WACC | 5.2% - 24.0% | 14.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | -0.14 | 0.4 |
| Additional risk adjustments | 2.0% | 2.5% |
| Cost of equity | 5.20% | 9.10% |
| Tax rate | 26.20% | 27.00% |
| Debt/Equity ratio | 10.42 | 10.42 |
| Cost of debt | 7.00% | 34.90% |
| After-tax WACC | 5.2% | 24.0% |
| Selected WACC | 14.6% | |
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 CRKN:
cost_of_equity (7.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (-0.14) + risk_adjustments (2.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.