The WACC of Crumbs Bake Shop Inc (CRMBQ) is 5.0%.
| Range | Selected | |
| Cost of equity | 4.90% - 36,313.30% | 18,159.10% |
| Tax rate | -% - 0.30% | 0.15% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 5.0% - 5.0% | 5.0% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | -296.83 | 6239.63 |
| Additional risk adjustments | 1366.5% | 1367.0% |
| Cost of equity | 4.90% | 36,313.30% |
| Tax rate | -% | 0.30% |
| Debt/Equity ratio | 798084.6 | 798084.6 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 5.0% | 5.0% |
| 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 CRMBQ:
cost_of_equity (18,159.10%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (-296.83) + risk_adjustments (1,366.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.